Monday, October 10, 2011

Netflix buys itself a clue, so my vacation takes a back seat

So I announced my vacation this past Saturday. It received all the fanfare that I expected. Then Netflix messed that up for me with today's announcement: they are undoing their decision to split the DVD and streaming business into separate companies. The news went out by 9AM this morning, and the company sent me an email saying the same about 2 & 1/2 hours after that.

I'm glad that Netflix made this choice - that they "saw the light" (or "got their heads out of their asses") - but it also means I have to break my vacation silence. Clearly, their Charlie Sheen-style binge has already reached the repentance phase. I've written about them too much to not follow this news and give my two cents. I think I'll post this and then re-date my "vacation" post so it'll show up afterwards.

Why did Netflix reverse its decision? Was it because of fan outcry? Was it because the idea wouldn't produce the desired "efficiencies" that the company was hoping for? Hell, no, it was because their stock price has dropped by about 60%. That's what they really care about, and that's what really motivated them.

It may sound harsh, like I'm an anti-corporate type, but that's not true. It's just that, if you follow my posts on Netflix, you'll recall that they removed all the personalization from their service. Specifically, you can't tell who gave a good/bad review to a video.

That basic misunderstanding of people, of taste - that some people's opinions are worth ignoring or seeking out, that knowing who wrote a review can determine whether you'll accept or reject it - not only undermines the usefulness of their website, it means that they see everybody as being the same: we're all nameless, faceless open wallets to Netflix. And they made that decision before they raised their prices for the 2nd time in less than a year.

The stock price, on the hand - that matters so much more than those "customers." A plunging stock price can lead to a change in management, and Mr. Hastings probably wants to keep his job.

And all of this plays nicely into the comparison I made when I first covered this Netflix + Quickster nonsense: that Netflix has gone totally Charlie Sheen on us and is acting as erratic as an actor who got himself fired from a freakishly cushy job. It just seems that the process was seriously sped up in Netflix's case; it took Sheen many months before he hit the "I admit I was acting like a psycho" phase.

How long before the relapse, tho? I say this because, in general, changes at major companies (especially big ones, like dividing your operations) require months of studies and approvals and decisions and planning. And if Quickster was going to have a separate stock listing, that would've involved lots of discussions with banks and stock market operators and the like.

What I'm getting at is that splitting the company in two was the sort of thing that must've been decided well before the public announcement, and would've represented a big financial expense even before the decision took effect. Naturally, un-doing that move must've cost them quite a bit of cash. But it also makes Netflix look unstable. Was it so easy to make a choice and then undo it, or did they simply have no choice?

It's amazing to me to think that Netflix doesn't have any real national competition anymore, but they've done more to undermine their own success than any other company has. I thought only a living, breathing person was able to be their own worst enemy.

No comments:

Post a Comment

Chime in!