The Public Relations
Box Office Flop
Integrated MBA –5 Years Program
(School of Management Studies)
Submitted to : Prof. Susmita Suggala
Group : 06
Dhrumil Dedaniya: 37 (Sleeping Partner)
Disha Meghrajani: 42
Gaurang Baria: 50 (Sleeping Partner)
Harikrushan Dholariya: 56
Nishal Shah : 111
Summary
Netflix was one of the world’s leading DVD These decisions resulted in a significant
rental services and a growing internet backlash from customers, who felt betrayed
streaming business. By September 2011, and abandoned by the company. Netflix’s
Netflix lost a significant percentage of its CEO, Reed Hastings, failed to adequately
loyal customer base due to its decision to address the public's concerns and the
increase customer rates and to separate the company lost 800,000 subscribers as a
DVD and online streaming services. result.
On July 12, 2011, before company
announcement to separate the DVD and However, Netflix eventually recovered by
online streaming services, Netflix’s stock pivoting its business model towards
price was $298. In September 19, 2011 its producing original content and investing
stock price had lost more than 51% of its heavily in technology and infrastructure to
value to be $143.75. improve its streaming service.
Place Your Footer Here 2
Fast
Facts
In 2011, Netflix announced a price increase and a Communication Create a separate Netflix continued
failure in company for their to pivot their
change to their DVD rental service that caused addressing the DVD rental service business model
backlash among customers and media outlets. customer about the called Qwikster towards streaming
change
Place Your Footer Here 3
Time Line
2011
2003-07 Raising its
1997
prices by 60%
300,000 1st Operating for customers Announced
Reed Hasting & Subscribers profit & 1 who wanted that it would
Marc Randolph Global both the DVD- be rebranding
(but still in Billionth DVD
founded Netflix Expansion by-mail and its DVD-by-
losses) & rented
In May, 2002 streaming video mail service as
released IPO 2010 services Qwikster
2000-02 2011
Place Your Footer Here 4
Having clear goals and a way of measuring
success is a good business strategy.
However, Netflix did not appear to have
established key goals or objectives to
follow while implementing their transition.
Without a clear public relations plans,
Netflix angered and dissatisfied many of its
subscribers by making major changes
without justifying them.
Objectives
& Goals
Place Your Footer Here 5
“I should have personally given a full justification to
our members of why we are separating DVD and
streaming, and charging for both. It wouldn’t have
changed the price increases, but it would have been
the right thing to do.”
Apology of CEO Reed Hastings
While Hastings' plans might have been beneficial
for customers in the long term, it would have been
helpful for the company to have an outlined public
relations plan from the start, which illustrated the
goals, objectives, and prepared responses.
Place Your Footer Here 6
Lack of Communication
Insufficient Ignoring Customer Ineffective Crisis
Poor Timing
Explanation Feedback Management
• Netflix didn't prepare • Netflix didn't explain the • The company ignored • Netflix's crisis
customers well, leaving split well. customer feedback. management was
them angry. ineffective and slow.
• Customers had questions • Netflix didn't change
• Poor internal but didn't get complete anything based on • The company had no
communication caused answers. feedback. plan for a PR crisis.
inconsistency in
presenting the changes. • Netflix didn't handle • The company didn't • Netflix failed to take
concerns well, making the prioritize customer needs. responsibility for the
crisis worse. crisis.
Place Your Footer Here 7
Key
Customers/subscribers
stakeholders
with whom
Netflix needs Stakeholders Content creators
to develop a
communication
response Employees
Place Your Footer Here 8
Further business actions
Netflix management might consider
There are several business actions that Netflix management could consider to continue to grow and improve the
company's performance:
• Expand into new markets: Netflix has already expanded into many countries around the world, but there are still
many untapped markets that it could enter. This could include countries in Asia, the Middle East, and Africa.
• Create more original content: Netflix has had great success with its original content, such as Stranger Things and
The Crown. By continuing to produce high-quality original content, Netflix can keep its subscribers engaged and
attract new subscribers.
• Develop new technologies: Netflix is already using artificial intelligence to improve its recommendation
algorithm and enhance the user experience. Management could consider investing in new technologies, such as
virtual reality or augmented reality, to further enhance the user experience.
• Offer different pricing plans: Netflix currently offers three pricing plans, but management could consider offering
more options to cater to different types of users. For example, a cheaper plan with fewer features could attract
price-sensitive consumers.
• Expand into new product categories: Netflix has already expanded into the production of movies and TV shows,
but it could also consider expanding into other product categories. For example, it could develop its own
merchandise or create original video games.
Place Your Footer Here 9
Conclusion
• Netflix executives lacked research, communication, and a marketing plan, which led to
a backlash from subscribers.
• Subscribers felt like their opinion didn't matter and that the changes were solely for
profit.
• Netflix needed to earn back the trust of its subscribers by meeting their expectations.
• Netflix should have adopted a holistic marketing style, which aligned with the behavior
of its customers.
• Netflix had the potential to provide a competitive advantage by being an
"Entertainment Portal."
• To correct its direction, Netflix needed to develop a marketing plan that communicated
its commitment to customers and introduced a customer incentive plan to reward and
thank its existing customers.
Place Your Footer Here 10
Thank
You
