Michelle Clancy ©RapidTVNews | 28-09-2011 Netflix CEO Reed Hastings is stepping it up a notch in his mea culpas over the company's recent 60% rate hikes, noting in an exclusive interview with ABC's evening news magazine, Nightline, that he had "regrets."
"We moved too quickly," Hastings told ABC News' John Donvan. "We didn't give it enough thought. We didn't give it enough explanation, enough integration, and you know, that's legitimately caused our customers to be angry."
So angry, in fact, that 600,000 of them cancelled their subscriptions, while the angry backlash caused Netflix to lose 50% of its market cap.
"It's a big setback, there's no question about that," Hastings said, somewhat obviously.
But chastened, Hastings seemed to be holding his metaphorical hat in his hands during the interview: "It's reading some of those comments that made me realise that I really did regret the way that we handled that communication," he said.
Hastings has been on a bit of an apology tour lately trying to lessen the damage done. He recently sent an apology email to all 25 million customers, saying simply, "I messed up," and took to the company blog for more of the same.
"I think we were just moving too fast," Hastings told Donovan. "Sometimes, the thing that makes you great, your speed, can trip you up, and so, you know, we need to be a little bit more thoughtful as we move."
But even as he acknowledged that the customer communication had been less than transparent (the original announcement never used the term "price increase," but rather disingenuously billed it as adding value to people's subscriptions), he said it was the right move for the company.
Netflix has been wrestling with shrinking margins thanks to international expansions to Canada and Latin America and escalating content licencing costs. The brick-and-mortar DVD-by-mail service is a waning one, and a lower-margin one, and the company clearly is looking to steer people towards online streaming instead.
Netflix' reversal of fortune could not come at a worse time, competitively-- Amazon, Hulu, DISH/Blockbuster and a range of pay-TV providers with their own streaming apps that are looking to mae Netflix irrelevant in the face of recent customer losses (Comcast Xfinity, for instance) are all making the streaming field a crowded one--and attacking it with a vengeance.