The Netflix “Mea Culpa”

I am an avid user of Netflix. We love watching movies in our house and take advantage of both the streaming and DVD by mail services. I paid one flat rate for both services and thought it was a great deal. A couple of months ago, Netflix sent an email to all of its customers saying that they were going to split up their streaming and DVD by mail services and charge for them separately. The result of this change was that having both services would cost more than 50% more than the bundled package.

The change was met with resistance. Many customers cancelled their accounts and the blog world was abuzz with outraged missives. Personally, I had no intention of cancelling or reducing my service because it still fits into my budget and it’s something I enjoy. However, I was miffed by the terse “take it or leave it” manner that the change was announced.

While the resistance to a 50% price increase should not have been a surprise, it seems that it might have caught Netflix off guard because this morning I received a lengthy email from the CEO of Netflix which began:

Dear [userID],

I messed up. I owe you an explanation.

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.

The email went on to explain the rationale behind the price increase as well as announcing some other upcoming changes in the Netflix business structure. It can be read it its entirety here.

The interesting part of the email to me however was not the content but the fact that a successful American company was not only offering a public apology, but acknowledging that customers should be informed about the reasons behind certain changes.

This shift from a model where customers are simply told decides to one where they are let in on the rationale of a decision parallels a similar shift that I want to encourage within organizations. I will be interested to see whether the email has any effect on Netflix’s stock price over the coming days and hope that companies will be encouraged to realize that both customers and employees are partners in their success and deserve to be treated as such.

What do you think of the idea of companies informing customers about the reasons behind wide-reaching corporate changes? Additionally, what do you think about companies apologizing for something that, in retrospect was not good for their public images?

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