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Netflix Open Letter: How Netflix Can Fix Their Problems

I’ve been writing about Netflix an awful lot lately, but it’s only because Netflix CEO Reed Hastings keeps doing things that they later need to apologize for. In case you’ve missed any of the news, here is a quick timeline of what happened:

How Could This Have Happened?

Last year, I couldn’t shut up about Netflix. I included them in my Free TV (almost) article, and I even provided a tutorial on how to access Netflix on your Nintendo Wii. I was a Netflix Cheerleader, and I marketed them on this blog absolutely free of charge. I loved their service so much that I told anyone who would listen.

How did Netflix go from me cheering them on, to writing article after article about the train wreck they’ve become?

Was it desperation? Was it short-sightedness? Was it fatigue? I’m not sure we’ll ever know fully, but what I can tell is the shareholders don’t like it. I know that Netflix was stagnating in content, and losing contract renewals with the media companies, but were they really so unimaginative that all they could think of was raising prices? Netflix, here are some ideas that I hope you might consider:

Netflix, Here Are Some Solutions

If anyone from Netflix is reading this, I’m sure you’re wondering: OK smart guy, what do you suggest? Instead of charging all of your customers involuntarily, why not charge the customers who would be willing to pay extra. Read on to see what I mean:

Hosting/Streaming Service:

You have an amazing streaming infrastructure, why not expand your services to offer a video hosting and streaming service to businesses? You could be a CDN for major companies, and it would probably require little in the way of new technology for you. In addition, you could allow customers to upgrade to a hosting package that would allow them to post videos (similar to Youtube), and stream them over the Netflix network to connected devices. You could also offer this upgrade for free, and use ads to support this channel.

Multiple Household Streams:

I used to have the capability to stream Netflix to multiple TVs at the same time, but you rolled out some code that stopped this. Instead of banning this practice entirely, why don’t you allow people to pay for this option? I’m sure there are customers who would pay a bit more to stream to multiple devices simultaneously. I know this was done to stop people from sharing their accounts, but this also penalized households with multiple family members and devices.

Additional Devices:

Currently, Netflix allows 3 devices on an account. Why not allow people to pay for more devices? This may not be a huge revenue stream, but why not test these waters out?

Unobtrusive Ads:

In areas of the Netflix application where we aren’t watching video, allow the placement of Ads such as above or below the instant queue. Allow people to pay a nominal fee if the ads bother them. I know Netflix is too proud to consider advertisements, but I’m sure the majority of customers would have preferred these unobtrusive ads over the 60% price hike.

A Cheaper Subsidized Option:

Allow people to pay a lower monthly fee in exchange for an ad supported model of some sort. Either blatant commercials before a stream, or little ads at the bottom of the page like Youtube currently uses. This may not be hugely popular, but during these current economic times, it probably would have boded better than the current decisions.

Quality Tiers:

This one might get a little backlash, but you could charge more for HD streaming. One way to spin this option would be to offer a slightly lower price for people to turn off HD streaming. I’m not sure how much this would save Netflix in bandwidth costs, but it’s just another idea.

Netflix ISP:

I know this would be a gargantuan project, but Netflix could start their own ISP to serve their media. I know this would begin to blend the lines between them and a cable company, but they would be able to avoid a lot of the head-butting with the ISPs, and it would expand them into a whole new line of business. I know this one is more of a pie-in-the-sky solution, but why not pull out all of the stops while I’m discussing this?

3D Streaming

I know we are probably a few years away from this, but once 3D streaming is available, charge a premium for it.

Cut Off The Free Loaders:

I know this would be difficult to implement, but there are plenty of people out there that share their subscriptions with other people. If you could figure out a way to cut off these free loaders, then you would be able to monetize some percentage of them without question. A good example would be preventing multiple xbox consoles from connecting via geographically different IP addresses. I know you implemented the simultaneous streams fix, but I’m sure there are plenty of others out there.

Reed, You’re Killing Me!

I’ve been saying for a while now that Reed Hastings was an excellent leader to get Netflix to where they were in August of this year, but his decisions lately have been concerning, and I’m not the only one. It has been very painful to watch the Netflix bloodbath as it has unfolded, and I can’t help but wonder why they seem to be testing ideas out on their customers live. You can’t just announce stuff and see what happens.

Undoubtedly, it seems like many of Reed Hasting’s decisions will be text book fodder for years to come in business classes. My favorite part of most textbooks was always the really silly decisions that caused companies to fail. But the companies in the textbooks were long gone by the time I was reading about them, so it is interesting and sad to see history in the making. I just wish it weren’t a company that I loved so much.

Netflix, Please Study Google

Google is continuously improving their offerings, and providing new products for their customers, all while charging nothing for the majority. Gmail: Free, Google Voice: Free, Google Maps: Free, Google Earth: Free, Google Analytics: Free, and the list goes on. They’ve learned to keep their customers happy, while charging the people willing to pay! Reed, or someone at Netflix, please consider some of these ideas. I’m giving them to you completely free of charge, even though I have to pay the same price for less service.

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