After announcing a severe price hike, Netflix has taken a major hit in public relations. Jason Gilbert from Huffington Post reported that BrandIndex, a research company that tracks public perception of businesses, saw a major decline in how Netflix was viewed by the public after the announcement. BrandIndex measures the ratings of companies by asking people if they have recently heard positive or negative news about any given business. They chart it by creating a data spread, where anything above zero represents good news and anything below represents bad news. 5,000 consumers are surveyed per day. Before the announcement, Netflix had a rating of 39.1, an excellent score that is far above zero. Afterwards, it dropped all the way down to -6, which caused its ranking to drop below that of Redbox and DirecTV, and just about tied with Blockbuster. Gulp.

What Happened?

The price hike obviously didn’t help matters. Netflix went from charging $9.99 for combined streaming and DVD rentals of their content to charging $7.99 for each. Though the price change did upset people, the way that it was handled by Netflix may have been the real damage done. The price hike was initially revealed in a press release and not through direct communication to the customers. That left people feeling alienated by the company that they were paying monthly. Netflix tried to spin the story by saying that they were lowering prices, which they were in theory, but failed to mention that they were also halving their product. Users smelled BS right away. Company spokesman Steve Swasey, instead of apologizing for the miscommunication, said,

"We knew there would be some people who would be upset. To most people, it's a latte or two."

Not good, Stevie. People were infuriated that Netflix was so out of touch with its users. As Netflix became a trending topic on Twitter for days last week, Netflix’s Twitter account stayed strangely silent through it all. All of these events combined led to a total PR meltdown, and outrage at Netflix’s audacity.

Conclusion

Netflix learned the hard way how fast word gets around when people are mad about something. Considering that Netflix makes its name in online streaming, it had to be aware that its (now pissed off) users were social media savvy. When Netflix made their various blunders in the last week, its users found ways to make their voices heard. Netflix learned a hard lesson. If you’re going to raise prices, do it in a way to ease consumers. And if you’re going to alienate customers, make sure they won’t take to Twitter. That’s becoming a harder proposition by the day.