In just two days, the announced change to Netflix’s pricing plans has generated a considerable amount of consumer backlash.  Anger spewed from fingers, through our keyboards, and onto a wide selection of Internet properties.  In the majority of the cases, consumers were not only angered by the price increases but enraged by the method in which consumers were informed.

In my case, I received a sterile, cold email that, seemingly, told me - in a very P. Diddy style - to “take that, take that, take that” regarding their new pricing model.  Like others, my consumer reaction was, “wait...I’m getting nothing (perceptually) more out of the service but my costs are increasing 33%.”

My Theory

After a couple of days of scowling every time I pass the red envelopes sitting on my counter, I’ve come to a different conclusion.

This wasn’t a wildly mismanaged communication but a purposeful attempt by Netflix to thin their customer base...a type of consumer-natural-selection...only the most profitable will survive.

The Great Netflix Breakup

From what I’ve read (and witnessed as a consumer), Netflix is full of talented business professionals with clever ideas and innovative strategies.  This message and delivery was so poorly handled that it seems implausible that the communication was simply an organizational failure versus a purposeful, strategic move.

Just as Netflix is experiencing explosive growth, I believe Netflix is facing the threatening realities of exponential operational costs.  Operational costs that may be directly tied to the number of subscribers.

As a result, Netflix is faced with the reality of price increases along with a parallel activity of eliminating unprofitable customers.

So this email may have been a very purposeful and, dare I say it, graceful way of breaking up with many of us.  This could have been a carefully worded break up - “it’s not you, it’s me and I think we should see other people [you: Redbox, me: profitable customers]” - versus what could have been a very harsh Trump-dump - “you’re fired.”

We have the choice to take control and end the relationship (cancel) versus an eventual hard break up (i.e. you're still not profitable and we're cancelling your service).

Other Thoughts

This is just one theory, but it would be interesting to know:

• Did all customers get this message?
  • Did all customers get the same message?
• Is/was there a profitability study within Netflix?  What were the results?
  • Does each customer have a ‘profitability score’ (revenue minus costs)?
  • Ex: Are customers that actually convert new Netflix customers through their referral program tracked?  Do they have a higher score and did that effect the first question?

My decision?  I’m not sure yet...but I’m not one to be in a relationship where the other person doesn’t want me as much as I want them.

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