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Netflix Price Increase: A Repeat Of 2014, Not 2011

NFLX has learned to communicate effectively after the 2011 disastrous price increase.

Raising the price $1 will allow it to accomplish what it states to its customers - more content.

With earnings around the corner, I am still a buyer and will add to my position on any dip post-earnings.

Most remember the debacle of Netflix's (NASDAQ:NFLX) stock price in 2011 - it soared to over $330 (prior to the 7:1 split) and sunk into the $60s after announcing changes to its baseline pricing structure. Netflix's July 2011 announcement of the price increase on its blog was so poorly communicated that most consumers digested it only through the media's interpretation. Thus many were angry. The NFLX Facebook page ran rampant with negative comments, and subscribers ran away over the price increase that was less than the cost of a beer and burger.

Making a mistake is only truly a mistake if you learn from it. As I was in a Big 10 University Graduate Communications program at the time and studying media effects/marketing, my classmates and I noted the issues with this message.

  1. The bottom line lacks clarity - it cannot be digested in a single reading and provides a more exhaustive explanation than needed.
  2. It had an "arrogant air" to its theme - almost like that of, say, a cable company, which is the absolute antithesis to NFLX's basis. The attitude could be summed up as, "the price is going up, and you will like it … and if you don't, then cancel … we dare you."
  3. And if you wanted to take NFLX's dare to cancel, the message gave the customer an easy way...

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