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Netflix price increase offers PR lessons

netflix price increaseSocial media tools, and the social marketing they make possible, have become such game-changers that it’s easy to forget how new they are.  Facebook, Twitter, and most other social networking sites have been available for about five years.  We’re living in the infancy of this new force and it’s impossible to know which aspects will transform the world and which will fade away.

This is especially true when it comes to the delicate dance between businesses and social media.  While most companies have scrambled to build Facebook pages and embrace new customer connections, some have been more reluctant, seeing open forums as an invitation to trouble — like handing out spray paint in a room full of graffiti artists.  Last week’s headlines involving Netflix couldn’t have done much to calm their nerves.

After the company announced plans to raise prices by 60%, nearly 80,000 angry responses filled Netflix’s Facebook page.  Twitter users threatened to cancel their subscriptions and about 6,000 people registered their outrage on the Netflix blog announcing the price increase.  According to Chris Taylor, San Francisco bureau chief of Mashable, Netflix rival Redbox briefly became one of the most popular searches on Google.

In an article on the subject, Taylor raises some important questions: Does a social network stoke anger that would have otherwise fizzled out?  When seeing that people share your outrage, does it reinforce your opinion?  Does this environment inherently encourage people to take the next step, to turn from commenters to protesters, to organize, to boycott?  “I believe it may well do that,” he concludes.

But not everyone agrees.  Pace Lattin, blogging for Technorati, points out that despite all the claims on Facebook, Twitter, Message Boards and Blogs of being “really, really” upset, exactly zero people showed up at Netflix Corporate Headquarters to protest the price increase.  He writes, “That’s because at the end of the day, the Internet allows anyone to easily give a false sense of outrage, because they know that no one really is paying attention to what they are saying.”

Patrick Lefler takes it one step further.  In a blog on the subject, he observes, “I think Netflix knew exactly what they were doing.  Despite the anticipated negative reaction, the price hike is part of a larger strategy to wean customers off the by-mail DVD service and focus on delivering movies and television shows via the Web.”

The recent misadventures at Netflix demonstrate that there are no firm rules and that every company has its own comfort level.  At our public relations firm, we help organizations navigate the evolving social media landscape.  Some businesses love it, some fear it, and some are reluctant participants.  Our job is to present the options and explore the outcomes.

At the start of the industrial revolution, people marveled that a train could travel at 10 miles per hour.  Little could they imagine today’s Maglev trains topping speeds of 350 mph.  Similarly, we live at the start of the social media revolution and have no idea of its eventual impact on the business of tomorrow.  But one thing is certain.  No company ever got ahead by standing still.

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