Has NetFlix gotten to big for its britches? – Safe enough to lose customers trust and still be on top.

Public relations scholar Lisa Lyon makes the point that reputation, unlike corporate image, is owned by the public. Reputation isn’t formed by packaging or slogans. A good reputation is created and destroyed by everything an organization does, from the way it handles conflicts with outside constituents.

I totally agree with Lisa Lyon statements about how reputation are created and destroyed. My Dad once told me: ” You can’t control what is said about you, but you can control what is said.” To take Lyon thought a little further the King James Version bible states that:

“A good name is rather to be chosen than great riches, and loving favour rather than silver and gold.”

So therefore you would think that would be the motto of all companies or organization. However, that is not always the case some companies  choose to have riches over a good name.

Netflix + paid actors = Epic Failure

In 2010, VP of communications Steve Swasey  hands were caught in the cookie jar when customers learn that hired actors to attend a press event in Toronto. The extras were told to act “very excited,” and especially be cheerful to the media. As you could imagine Swasey spent the day  attempting  putt out this fire the more he tired to put it out the more he just fanned the flames. Making what was already  an embarrassing story into a Epic PR Failure.

Eventually, Swasey waved his white flag in a blog post cleverly titled: “We Blew It.”

He confirmed the story is true:

“The launch included the shooting of a corporate video with some hired extras, who, it turns out, were given improper direction to talk with the news media about their enthusiasm for the Netflix service. This was a mistake and was not intended to be part of our launch plan. Simply put: we blew it. We didn’t intend to mislead the media or the public, and we can understand why some have raised questions. We’re sorry that our misfire has given Canadians any reasons to doubt our authenticity or our sincerity.”

Sooo, NetFlix has money to pay extras to deceive. Not that i would want to be deceived but i would rather to be deceived by famous actors.  Extras Netflixs Really Extras! Then out of the blue Netflixs announced a new pricing structure that will raise some customers monthly bill by 60 percent.

According, to Think Public Relations:“Public relation professionals must develop communication strategies and process to influence the course of conflicts to the benefit of their organizations and, when possible, to the benefit of the organizations’ many constituents. The deliberate influence is called strategic conflict management.”

Ralph Waldo Emerson once said,”Finish each day and be done with it. You have done what you could. Some blunders and absurdities no doubt crept in; forget them as soon as you can. Tomorrow is a new day; begin it well and serenely and with too high a spirit to be encumbered with your old nonsense.”

From the reputation side of things  i have tip my hat to Netflix for owning up to their mistakes. I felt that Swasey truly lived  the above quote of Ralph Waldo Emerson that day and the days after this pr nightmare. Sometimes it’s the pr job to take one for the team.

However, from Image restoration side of things Think Public Relations also states that:”reputation repair and maintenance is a long- term process, but one of the first steps in the process is the final one in the conflict management life cycle.”

Commentors accused Netflix of being greedy and alleged it was trying to “choke more change” out of its customers. Others suggested refreshing the streaming content to justify the price change. Others said they would be leaving Netflix. From reading some of the customers comments Nerflix has a serious image restoration reputation to repair.


Deceiving reporters and the public in this manner violates several principles of PRSA’s Code of Ethics:

– Failure to disclose information. Netflix was not honest about the identity of the attendees. This decreases trust with the public.

– Failure of free flow of information. Honesty and accuracy are vital in maintaining a good relationship with the media and the public.

– Failure to enhance the profession. I’m sure many PR professionals are shaking their heads in disbelief right now. Many professionals work constantly to strengthen the public’s trust in PR, and blunders like these are a big blow.

For those reason and other reasons I feel  is the main problems that Netflix is losing the public’s trust. I must admit I am a user of Netflix services the price increase has yet become an issue for me. I share the service with my parents and my older sister and we split the cost amongst ourselves. I am  I upset with the price increase?- no i am not because my family and I no longer has cable. Compared to what my sister and I was paying for cable at out apartment and what my parents were paying we are happy with the price of Netflix. I do understand the frustration of customers when you get use to paying for something at one price and all of sudden it changes without any heads up. That is no way to treat loyal customers or new customers. If they were planing on making these changes then they should have made their customers aware of these possible changes a head of time.

I feel Blockbuster is a great example of a company that was too big and too slow to make changes in their business philosophy and strategy soon enough. Instead, the changes they made were re-active, not pro-active and too little too late. Blockbuster CEO’s were content solely on being greedy. This is a PERFECT example of what will happen to a company, if/when it refuses to consider it’s own longevity, in the grand scheme of things. As a result, Blockbuster CEO’s had no choice to have a    intimate business date with Chapter 11.

I strongly suggest that Netflix tighten up those britches the service they offer is a Great one don’t go messing up a good thing. Deceiving and messing the cost is not the route you want to take for increasing success. Netflix should learn from Blockbusters  mistakes and try their hardest to avoid making the same mistakes.  They will get hit where it hurts them the most and that is in their pockets ” company’s shares wise.” I feel that  Netflix is still a new enough  company to bounce back from their mistakes. There maybe be a bitter-sweet relationship with their customers but i am sure “Some” will remain loyal.   As the old saying goes: “if it is broken why fix it?”

– Dee Moore

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47 thoughts on “Has NetFlix gotten to big for its britches? – Safe enough to lose customers trust and still be on top.

  1. You know…I think all Netflix had to do to avoid a big blunder was, in that handout to the extras, make an explicit statement saying DO NOT TALK TO PRESS/MEDIA. It would make things weird, yes, but paying people to be excited about a product and working to incite excitement in the Average Joe is not a bad thing. Doing so while continuing to PRETEND when a mic is put in your face is, well, no bueno, as this shows.

    Shoulda just done some big, goofy flash mob or singing entourage like T-Mobile’s Welcome Back campaign. Paid folks playing the Average Joe, but outed once interest was incited. Seriously, Netflix. Get some extras who can tap dance.

    I don’t think the pricing issue really relates to your first point on the extras. In the sense that displeasure is built up against them, yes, but people will always groan whenever the numbers go up on any product. It’s just a fact of life, and oftentimes, little can be done to stop it. And actually, many companies work REALLY hard to keep those prices fair until the last moment possible when it becomes detrimental to the bottom line.

    But I agree – the public apology was a positive step. Perhaps only a hobble, in the face of rate increases, but silence would’ve been a saltier wound.

    -Laura

    • Well both examples that are talked about in the blog post tend to happen around the same time of the year one towards the end of 2010 and now towards the end of 2011. it seem to be a pattern i felt. It relates to the point of the reputation how in which they are going about building it and losing trust from both issues the paid extra and the price increases. Also, that they had just getting image restored over the who paid extras then bam they are increasing prices. the company seems to not be stable they seem sloppy. Often time business hire famous to be the spokes person for the company not be cause the product is good but because it will bring a certain audience to buy …

      • the product. Those people are hired to do a service the same way these extra were too but whereas the hiring of famous people is to create trust in a brand loyalty. with the hiring of extras it created trust issue amongst the customers and Netflix. The issue is that customers we not made aware of the changes before seeing it on their bills. Also, its a 60% percent increase not an 1% or 10% in their bill. so look at from a money point of view and trying to balance day to day expenses.

      • WELL THEN…60 percent. That’s.

        Totally reasonable…

        Not really.

        I’d like to have an ear to the door of their corporate meetings and hear what’s pushing these changes/decisions? Because that’s a lot of mood whiplash for consumers. I wonder if the competition/lack thereof is kind of proliferating this kind of behavior?

      • I would have totally have to agree with your last comment i think Netflix has gotten to comfortable with their success and now they think they do and say what ever and then just come back and apologize later.

  2. Laura, if Netflix had just told the actors to not talk to the media they would still have been lying to the public. Are you arguing it’s OK for a company to do that?

    Dee do you know the time-line between when the event happened and when Steve Swasey apologized? We’ll learn about crisis communication later n the semester, but it plays a huge role in consumers attitude toward a company.

    Gina

    • I guess I don’t see this as very different from the setup to one of those surprise events – except for the part where they didn’t do the reveal/surprise? Which…is a big exception, of course, but I don’t know. A THANKS FOR PLAYING ALONG thing at the end of it, or something…I’ve seen secret junk like this played out for kicks and campaigns…The key is just calling it what it is at the end of the day, which didn’t happen.

      So I guess it’s still a wash. 😐

      • Totally see your point. when i sat down to write this blog i was looking at Netflix as a whole is the last yr. The way in which they handled things. In the first issue of the paid extras the pr step up and handled the issue and took the blame. I was waiting to see who was going to take the blame for the price increase not being communicated to the customers. The CEO of Netflix has taken the blame for the issue in fact he did the past sunday. http://abcnews.go.com/blogs/technology/2011/09/netflix-ceo-apologizes-for-price-increase-announces-qwikster-to-mail-dvds/ its is my fault that i did not include it in this blog .

      • However, the i showing the importance of a company to value its customers and to have good reputation. How easily one mistakes can cost them customers that may or may not come back. How it is is important to communicate with your customers. Also so how repairing your image will be a pain in the butt. It was a cause and effect type piece. I appreciate your thoughts because i can see it differently or how i could written this blog so thank you.

  3. Dee,

    I understand that there is a serious problem that Netflix is facing with their customers. From feeling deceit over the Swasey incident to the price-raising issue, I agree that they have a lot of cleaning up to do. However, I must ask, when does it become the PR’s fault and not Netflix? This is my personal opinion; the company chooses what they want to do and when they want to do it. I see PR as being the affectionate caregiver–“Don’t do this, Bobby” kind of caretaking when it comes to companies. I can safely say that I believe it was Netflix, not the PR firm/corporation that they have, that raised prices and pulled that stunt. The PR firm gets the bad end of it by having to do things like crisis management and make public statements such as the “We blew it” comment made by Swasey.

    With all that said, where does PR fall into it?

      • I did take a look at the apology, but let me explain myself a bit further. What I’m saying is, I see the VP of Communications saying something, I see the CEO saying something, etc. These people, to me, are not P.R. people. What was the role that Public Relations took into it, or are you saying that they are, in essence, acting as ghost writers of some sort? These people to me, are making remarks of their own volition. To me, an effective P.R. firm wouldn’t have let them make some of those mistakes that they made if they had of consulted them. I could be wrong, but it is solely my opinion (I’m putting that disclaimer in). So, what I;m asking you is, personally, do you feel that the P.R. is at fault with some of the decisions that were made and how everything is handled? I just would like to know, what do you think should have been done in the role of the P.R. firm that they have?

  4. Dee,

    This price increase business seems to me like every other big business. Up the price for more money for them, disregarding the consumer. Or how, about, when cable first came out. My dad on rare occasions will comment about how he remembers when cable first came out and it boasted it was better than regular television because it had no commercials. Now, I swear you watch more commercials than actually programming. When I read your blog, that’s just what it reminded me of.

    In regards to the paid actors, I can understand how that is a PR stunt, but I guess, I personally do not care. I barely believe actors use anything they endorse. It’s like the actresses who endorse ProActive for their one or two zits claiming they had such HORRIBLE acne. In this case, we just have paid actors claiming they love Netflix who got caught in a lie. Oops. Probably should have planned that better on Netflix’s part, at least they apologized, so their PR’s reps aren’t really that bad. I guess I just can’t imagine that many of Netflix’s consumers getting in a huff and cancelling a subscription just because So and So doesn’t actually endorse it. Instead, let’s hope they learned from their mistake and hope that their next PR decision is increasingly better.

    Dayna

    • I totally agree with you dad thoughts those were my parents thoughts too. The point of the paid actors its a ethics issues at hand. We know celebrities are paid spokes person for a products. Trust no one is not not going to speak so highly of something and not get paid for it lol! So yes your ProActive is a great exaple of usage of people to “lie” to their customers. So that too is the same unethical issue i was pointing out within the blog. But we tend to accepting things if it is someone we can like or know that is famous. In some ways we want to be like famous people so when we see that they have the same issues as us everyday people.

      • we are willing to try the product just on the fact that we can relate to them when come to achene issues. If you knew someone was trying to deceive or change thing with give you far warning wouldn’t you be upset too?

  5. Owning up to the press and truthfully releasing what really happened: BRAVO SWASEY! Perfect way to solve such a messy problem. I don’t think i could see any other company using the “Truth and Nothing But-” technique, so as a customer I buy into the sincerity of a company trying to stay afloat. I just received a block buster add in the mail. It reads “Bye Bye Netflicks” and “Hello Block Buster” on the front. On the back it lists all of those points you talked about Dee: The 60% increase, ext. Now Blockbuster offers the same exact DVD rental technique that they’ve never offered before even cheaper!! You can’t fault net flicks because they had a great business head and realized that popular companies like Redbox would eventually turn up the heat, and slowed down businesses like “Blockbuster” would power back up with innovation and get back on the good foot. I terminated my 30 day free trial yesterday after knowing about the 60% increase. Hopefully by now most of its customers are in that marketing level of ” best friend” and theres a relationship between the two. There will be more like me that don’t renew, but for those die hard streamers out there be ready to burn a hole in your pocket!

    • As i read some of the comments and re read my blog i think i may have not did a good as job as i hope. The point of the blog was not to talk about different terms with in the book and apply them to things that are going on with a company. i Happen to chose Netflix because i use their service. When i wrote this blog i was not writing it from the stand point that Netflix and it many competitors. I was examining one company’s business/ pr practices as it apply to the creating a destroying of a reputation. Also, how repairing the image is important. I was looking at from the work in which a pr would have to do .

  6. Dee,
    I found your post to be extremely useful. My roommate and I were contemplating if we should get cable or Netflix. I’ve had several people tell me that the prices will increase over time. It’s kind of sad to hear that they had to take this route. I mean hiring actors to act enthusiastic is not only dishonest but tacky as well. Honestly, aside from the few people that have experienced a burden due to the price increase, I’ve heard it isn’t that bad. I personally would choose their services over cable. It seems as though they offer a quality service. I mean who wouldn’t want a diverse movie collection at your finger tips. As far as image restoration, I agree with the book.

    “reputation repair and maintenance is a long- term process, but one of the first steps in the process is the final one in the conflict management life cycle.”

    I believe you have to tackle the issue head on. Now from my understanding Netflix hasn’t exactly gained everyone’s trust. Consumers need to feel like a company is working to reverse its wrongs. Yes, they admit they “blew it” but there were other issues to discuss. They surely could have attacked a lot of their other problems at that point as well. As a consumer, I’m more prone to forgive and at least attempt to rebuild a relationship, if they’ve laid all their flaws out on the table.

    • I honestly think you are the only person thus far that has understood the point of my entire blog. i starting think i didn’t do a good job at expressing the main points and how they all connect. thanks !

      • I see , hmmm well everyone interprets information differently. I think you did a pretty good job. As far as relevant connections, it’s just something you might need to work on. No worries though, that is why we’re in this class 🙂

  7. I believe that NetFlix action was a BIGGGG no no no. Although I would not call it deceiving like Dee did, because if you would call it that, then you would call everything we see or hear on TV deceiving. Every single commercial uses the same techniques NetFlix used. They hire actors to say that their products are the best.

    Whether those actors are famous or not, it’s all lies, or as advertising people call it PUFFERY!! Those stains remover never really remove any stains, that shampoo does not make your hair look like that guy or girl in the commercial and Nike shoes does not make you run faster than Adidas shoes. Even worse, doctors and hospitals do that, they bring a bunch of actors who claim to be treated by this clinic or that doctor and then say that they had the best service ever.

    It’s all advertising, it’s all puffery. We as consumers can’t do anything about it. Why? Because the law said, yeah this is puffery. People are not naive, you should know that Jimmy Jones is not really the greatest sandwiches in the world, it is just exaggeration and it is ok.

    However, although Netflix case is not as any different than ProActive or any other product. I still think they should have not done that! Whomever they hired for the job, did a very very bad PR job, and it did nothing but ruin NetFlix’s reputation.

    • so shouldn’t we hold these companies responsible we have these ethic rules but we don’t make the companies up hold them. what Netflix did was deceive i was pointing them out for the blog. but when dod we start hold them accountable for the things we buy into. is it ok to be lied to. would you want some you love and trust to just lie to you all the time and you don’t say anything? you would say something i know you would. you will get tired of it. so when will we as consumers get tired and hold them responsible.

      • Costumers are always lied to and thats the shameful part because we’ve oddly become use to it and now were just accepting what we see and not what’s being advertised, if love was the same way, I would honestly hate to see how the world would become

  8. I agree that this wasn’t the best move in regards to PR; but i can’t help but think that companies use slightly dishonest tactics all of the time to boost their reputation or increase the attendance at an event.

    For example: If your familiar with Chris Brown and his situation with Rihanna, then you may be familiar with his performance at an award show about a year later, where he performed a Micheal Jackson tribute and was very VERY emotional. I believe that this was something set up by his publicist to express to the world that he is a a man with emotion and that he was truly sorry for what he had done. Showing such extreme emotion allowed the audience to connect with him.

    Now do i think his emotion was genuine? somewhat…Anyone who had the opportunity to perform a Micheal Jackson tribute would be emotional; but do i think it was over-done? Yes! for PR purposes.

    I say this to say that we can’t jump all over NetFlix for doing something dishonest. At least they owned up to it. Anybody with their name, or company’s name in the spotlight will a lot of things, slightly dishonest or not, to uphold their reputation.

  9. I cannot help but think about the class lecture on September 20th when Gina touched on Crisis Communication. I wouldn’t even say that Netflix has gotten to big for it’s britches rather than Netflix just got caught with their britches down. The attempt of misleading the public and the media is a big mistake on the part of Netflix. In addition to all of that, the company hiked it’s prices without any forewarning? I would say that Netflix is definitely in hot water. Moving on, so Netflix made the mess, now they have to clean it up and be on damage control. The PR point person or agency has done a very bad job in doing so. It only takes one mistake to tarnish a company’s reputation but it takes a long time to build it back up. In the beginning stages Netflix has done a terrible job with damage control, but I imagine over time customers will begin to trust and remain loyal to them as their PR people become more clever and creative. As the company grows, customers will have to voice that they don’t want their monthly bills to grow with it. Personally, I say why bother. Netflix was almost too good to be true.

  10. I would pose a similar question as goellego’s about whether Netflix not having much competition made them relax a bit too much. Competetion has really diminished from when Blockbuster was dominating the movie industry. Maybe Netflix doesn’t feel the need to up their quality of PR as much?

    As a current customer of theirs I would also say that they did send me an email a couple months before they changed the rates, warning me of the coming changes. Though after this I don’t know if they’re really worth staying with. It’s basically the journalistic equivalent of making up quotes for a source.

  11. Dee,

    The timing of your blog couldn’t be at a better time. I actually just cut my Netflix service in half due to the price change. They still allow certain features so you’re not paying full price. Which, I think keeping the streaming feature saved some of Netflix’s customers.

    Obviously, maintaining a great reputation and customer satisfaction is extremely important, but I still see their business strategy. Increasing the price of your product over time is crucial the more your company expands, not only to keep it running, but to stay on top.

    Netflix’s should have increased their prices a couple bucks a month, not charge almost double… Or the PR people should have publicized some new benefits to sticking with Netflix. All I ever heard was Netflix price increase!

    I believe Netflix joined with another company so because of that, more options should be made available, or more perks should be offered to sticking with the company. It’s a given people are going to be upset about a price increase, especially in something that is popular, successful, and has made millions on being such a great deal.

    I can appreciate that they owned up for their mistakes and said they blew it, but in my opinion there were so many better options. Work with your customers for crying out loud. Keep them happy and reward them for staying. It’s a give and take relationship.

    Taylor Maguire

    • i glad you were able to understand the point s i was able to make i with this blog. i still have my Netflix account but i don’t use it much as i did during the summer months.

  12. As I am reading the previous comments, I have to agree with some that this is not all the fault of PR, but more of the companies open wound. The idea of the false actors and change of price in Netflix is extremely unethical.
    This has done nothing but give blockbuster exactly what they were hoping for, a break! Now they can maintain their business by claiming to be the opposite of Netflix, to gain their customers. Saying “we blew it” was a smart move in my opinion because if the dish is already out why lie and try to cover things up??There was nothing else to be said, and just like other companies that do bad things; they didn’t believe they would get caught. My advise, be as honest as possible and don’t do things that could possibly ruin your operation. Period. Following to PRSA code of ethics is a very important rule in building a foundation. Dee, I totally agree with you that Netflix better tighten up its britches before Blockbuster takes over the movie world and knock them out of business for good. -Martise

  13. Not being a current user of Netflix this change does not affect me in particular.To have paid actors is something that I believe most companies do. It was just the matter that Netflix allowed the paid actors to directly speak with media and got caught! To take full responsibility and confess to their unethical decision was very profound of Netflix to do. Usually big companies cover it up and or make up some sort of an excuse. As far as the price raise, who gets excited about paying more? I understand that Netflix is indeed a business.The popular it becomes the more it’ll cost. It’s the basics of supply and demand.

  14. Overall, as a Netflix customer, this little scandal doesn’t really bother me much. The extras were told to act excited and cheerful – isn’t that what all commercials do, though? “I love new Swiffer WetJets!” The actors are paid to say the lines – they don’t necessarily agree. Besides, lying about whether or not you are “excited” is hardly a worry compared to lying about the services of a product, or the quality. People like Netflix because it is convenient and cheaper than constantly renting from Blockbuster. Despite this, I sincerely doubt their customer base will decrease – as for the price increase, that may be a different story. If anything, though, the fact that Swasey owned up to the mistake will help in the long run, because people will feel like they can trust Netflix to tell the truth – even if it makes them look bad.

    -Silvana

  15. Costumers are always lied to and thats the shameful part because we’ve oddly become use to it and now were just accepting what we see and not what’s being advertised, if love was the same way, I would honestly hate to see how the world would become. Netflix I believe are just following suite of other liars, which is very shameful, but the truth will come out, more like this blog again

  16. I get the impression that Netflix, now with their price increase and media split, just didn’t take the time to research or even estimate where they would be in the coming years fiscally or responsibly. It clearly comes off as a company who had a terrific idea, rushed to get it out there, and it grew to be too big too fast.

    Their irresponsibility has show it’s ugly face in a way that has greatly affected them socially. Their reputation as a high-end streaming and DVD rental company has fallen to the point where even the laziest people won’t bother with them on principal alone.

    I’ve let my sister piggy-back on my Netflix account, and she’s jumped ship to Red Box because of the way the company handles itself, and she’s not the one paying for it. It hasn’t made me itchy enough to pull the plug, but it certainly hasn’t thrilled me.

    -Dan Williams

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