Netflix Case 2

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Date Submitted: 11/25/2012 10:44 AM

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3. Alternative Solutions

Splitting DVD Rental From Online Streaming

After Reed Hasting’s new plan and price change took affect on September 1, 2011, Netflix lost a total of 805 000 subscribers due to the drastic change. It is clear that Netflix should keep the online movie streaming and the DVD rentals together under one account instead of separating them. They should not change the system because since the customers are already comfortable with the current system, the change can create a lot of confusion. If Netflix decides to do the separation, the subscribers who want both streaming and DVDs will then need to get two different accounts. By having Netflix specializing in the streaming and Qwikster doing DVDs, it would not be convenient for the customers because they will have to manage two separate accounts. In order for the plan to be effective, Netflix has to figure out a way to make the separation of the two services to be less confusing and simpler for the customers to use. Therefore, the company should reconsider the decision to make the drastic change since it is already bringing a lot of success with the old structure.

Price Change

After a slow growth period in 2005, Netflix quickly recovered two years later by introducing a new plan to their customers. The new plan provided members with unlimited movie rentals and online streaming for only $10 per month flat fee for both services. The business model allowed Netflix to gain back twice the amount of subscribers, which led to their success for the following years. In 2011, along with the change with the system, Reed Hasting decided to make the change to the prices by raising it up from $10 per month to $15.98. With the price increase, customers were not happy with the drastic change and gave some negative criticism back to him. The company should work on the communication skills between Netflix and their customers to see their perspective and what they would like to have instead of radically...