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What's astonishing about Netflix's customer experience
You probably saw the Netflix news last week: they're going streaming-only, while the DVD business gets shunted off into something called Quikster. All with a price rise and an inauthentic "apology" leading things off.
As for the name, one comment I saw online put it best: they should have named it Quitster.
As bad as the name is, as poorly written as the announcement was, I'm much more surprised by one aspect of the resulting customer experience:
For the first time in history, a major Internet company is voluntarily shrinking its search results.
Think about it. Take an example like Amazon, which for years has been adding products, whole product lines, all in the service of increasing its search results. The bigger the selection, the more likely you are to return to that - exact - search button.
You could make the same case for search engines over the years - Google always increasing what it indexes, and now Bing trying to place second, in large part by growing its index. As someone else said online recently, if it's not indexed online, it may as well not exist at all.
Here's a customer experience tip. Customers like to click Search just once. Increasing the size of your search index improves the customer experience, which improves the business.
In the case of Netfwikster, or whatever name it will soon go by, I'm just flabbergasted that they would voluntarily reduce the number of search results they make available to customers.
Now, plenty of people have weighed in on why Netflix has made A Very Bad Move Indeed - one such analysis coming from David Pogue, who reluctantly points out that it's probably a good business move, as the price rise will vastly outweigh the defection of a million or more customers.
But this misses the point. Customer experience is a long-term game. Netflix took down Blockbuster by giving customers a better experience than the competition - but it took years. Netflix's current moves might make some short-term gains, but if the long-term strategy continues to ignore the customer experience, watch out.
In the long run, given competition, the best customer experience will always win.
What do you think? Will the Netflix/Quikster split turn out to offer a better customer experience in the long run? Does it even matter?
Seems they took a look into their future and saw dvd-by-mail one day being completely replaced by streaming and decided to cut their loses early in the form of a disposable spinoff business that wont take the main Netflix brand with it when it dies.
We will likely see focus and improvements to the customer service (faster response times, more selection, etc) for streaming as they work to come out ahead against cable on demand, hulu, amazon, itunes and all other forms of non-physical media providers.
At the same time I see the dvd-by-mail company reducing staff and increasing max acceptable turn around ship times.
I'm guessing this is a financial, rather than product, decision. They're setting up to split the Netflix stock into two stocks, one for the streaming side and one for the DVD side. They'll then set the profitable, but low-growth / no-growth side of the DVD business adrift. Right or wrong, it's a classic market arbitrage to split a low-profit, high growth business from a cash-strong, low-growth biz and hope that each half is more appealing to a either growth or value investors than the combined entity.
Interesting question...this move is clearly about business objectives over user experience. In an ideal world, netflix would be online streaming...that eliminates the need to wait for dvd's and is likely a better user experience. And when you make a big change to a consumer product you tend to get a lot of pushback, especially when you have a loyal community of followers. My hunch is that 2 things are underlying this counter-intuitive move: 1. Netflix is unable to get all content in streaming form and encountering resistance from the content providers (their biz partners). And it's the old chicken-egg scenario - without sufficient numbers of streaming only customers, they lack sufficient leverage over the studios to get more movies available in streaming format. And to ultimately drive a better customer experience, they need this leverage. If they can get the leverage soon, and get close to 100% content streaming, then customers will be happy. 2. DVD's by mail are dying and by separating out the businesses, it gives them leverage to highlight the different growth aspects of the business, which will ultimately keep investors happy. And eventually they could then spin off or sell that aspect of the business. I think if they can get the leverage and the content soon then everyone will be happy....if not, we will continue to hear from many angry and loyal customers.
For me, Quitster offers a better experience immediately. When I add a DVD to the my queue, I know exactly where it's going. It's going into my DVD queue. I found the "two-types-of-viewing" confusing, at least the way they did it. I had eventually figured out how to stream a movie & concluded that in my home it would require additional hardware purchase and configuration, likely to waste my time & not work very well. I just want to watch a doggone movie! I'm sure I'll get into streaming again in a year or two -- probably through Amazon or some outfit that doesn't even exist now. But I went with Quitster & also increased the number of DVD's I check out at a time. I thought you might enjoy this different perspective...
Yes, Netflix could have handled the PR better. However I think they have made the right move. I and many other users have begun to use the streaming service exclusively, even before the split. Many users therefore don't care that seach results have shrunk, because they actually haven't.
This move makes it easier for Netflix to deliver a better streaming experience in the long run by positioning the streaming product to be in a better position to license content at a better price and at a flat rate - not tiered like a cable provider. This is exactly what I and many others want. Netflix has had the foresight to realize that streaming is where the future lies, even if others don't see it yet.
I kind of have the opposite experience of George... all of my TVs will stream netflix but I only have one attached to a DVD player. So I'd find movies on the old Netflix, only to learn I couldn't watch them because they weren't streaming. Now if they show up, I know I can watch them.
I'm not outraged and find other's outrage a bit humorous. Entertainment options are changing so quickly that I don't expect anything to last very long. It decreases my loyalty to a brand but that also seems to be the way it is these days.
Wow, I don't agree. I don't want to click search "once". Because usually when I just click it once, I get way, way too many matches. I want to click again and again to narrow the results by categories or price or year or whatever sub categories make sense. I don't want to page through dozens of DVD only pages when what I want is streaming... I'm glad they separated the businesses!
I agree that the best customer experience is likely to win. But Netflix' decision appears to have a different customer in mind: their shareholders. I agree with Tom - that it's a financial decision.
Will it work in the long run? I doubt it. There's too much competition. And customers aren't going to stay true to Netflix if a better customer experience shows up. I think Netflix is clued in on that. That's why they're taking a relatively short-run approach. Netflix isn't a company that's built to last. It's built to scale, split, and run its course.
I find your argument about the better user experience existing BEFORE the split to be very narrow minded. Tracy has it right about paging through dozens of DVDs to find a streaming movie. If you're addressing user experience, I can attest to being extremely unsatisfied as a streaming member to have 3/4 of my search results be for DVD only. I'd rather search for a movie and only find streaming options. That's good user experience. I know this may cause some inconvenience for anyone with both a DVD and streaming account, but it would certainly appear that those numbers are declining fairly quickly.
I'm sure business had a huge roll in the moves Netflix took. I don't think they audience is shareholders, but after looking into this issue, it seems like Netflix had to pay streaming usage rights to the studios for EVERY Netflix member, whether they would stream movies at all. That's potentially a huge git to their earnings. After the plot they pay streaming right only to members of the new Netflix.com, not Qwikster members.
I was hoping you'd write about this and I didn't even think about the search angle. To me as a Netflix customer it's just insulting to change a service I was perfectly happy with. It's insulting, that business motives take such obvious priority over user happiness. Plus there are so many other entertainment options which compete with Netflix, why diminish your user base? And nobody puts the "...ster" suffix on a brand, that is soooooo 2001. When the news hit, I remembered that I had heard the name Reed Hastings before... from an old boss over a decade ago, a money obsessed cad.
Netflix traded real, happy customers for the possibility of new customers in the future on a different platform where they have an unexceptional offering. And openly courted investors, while publicly insulting their userbase about lattés.
Textbook MBA disaster.
What Netflix lost with this split was the ability to leverage their customer base from DVD to Streaming. I am a long time customer who probably does DVD 90% and streaming 10%. But that is due to the limited inventory. I cut back to just DVD with the price increase because I could't justify the extra money for the content they had. BUT - if the sites had stayed one - as content grew, I might have added back in the streaming. Now - if I want to do streaming - why would i pick Netflix? Since I have to go to a totally different site for streaming, I can pick anyone. In fact, I am an Amazon Prime member, so they give me lots of streaming for free with that membership. So basically, Netflix just handed my future business with them over to a competitor.