Netflix Users Returning, Subscriptions Rebounding As Customers Forgive 'Qwikster' Debacle


Is the rebound from the Qwikster debacle going qwikly for Netflix?

Based on two new pieces of Netflix news, it appears that all of the customers that Reed Hastings and company had angered are starting to forgive the company for its infamous price hike in July 2011 and aborted Qwikster launch in October.

First, we have a customer satisfaction survey from customer analytics firm ForeSee, which found that Netflix's satisfaction levels are creeping up from lows the company experienced in 2011. Considering that ForeSee measured Netflix as the "biggest loser in customer satisfaction" of all online retailers in 2011, the company's gains, however modest, have to be taken as good news.

Second, and more tellingly, is this quote from Netflix CFO David Wells at the J.P. Morgan Technology, Media and Telecom Conference (yes, the same one where Verizon CFO Fran Shammo spilled the beans on his company's plans to end grandfathered unlimited plans -- busy conference this year!). Apparently, Netflix is winning back customers in droves, and many of those customers are returning after having left in righteous anger over the price hike and/or Qwikster debacles. Here's the money quote by Wells from the Wednesday session, as transcribed by John Biggs at TechCrunch:

...the improvements in retention and our growth in Q1 and Q2 since Q3 and Q4 of last year make us feel pretty good. Rejoined or folks rejoining the service still remain about a third of our new subscribers that are coming in. Even streaming-only subscriptions, who should not have faced an impact, reacted to last year. We think that’s a result of the negative PR, the swirl that was around the brand and the company will dissipate over time.

From the numbers Wells is giving -- that a full third of new sign-ups are returning customers -- it seems like that "negative PR swirl" is already dissipating. Remember that in Fall 2011, after the price hike, Netflix reported a larger drop in subscribers than it had anticipated -- and it had already anticipated a pretty large drop in subscribers. The reason: Subscribers hated the pricing changes and let Netflix know how they felt by taking their money elsewhere.

"Our primary issue," wrote Wells and CEO Reed Hastings in a letter to investors, "is many of our long-term members felt shocked by the pricing changes, and more of them have expressed that by canceling Netflix than we expected."

Now, they're coming back. Perhaps we are forgiving Netflix, or realizing that the other options are either less satisfying or far more expensive. The acquisition of "Arrested Development," Season 4, didn't hurt, nor does its ongoing tiff with much-loathed cable giant Comcast. Whatever it is, old subscribers are on their way back to the streaming service; perhaps Netflix should change its motto to "Forgive and Forget."

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