Hubris, Schadenfreude and Netflix

Two fancy, English major-worthy words that rarely come up -- especially at telecommunications websites -- fit the current Netflix situation perfectly: hubris and schadenfreude. Netflix, to review, has spent the better part of the past few months trying as...

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By Carl Weinschenk, Senior Editor

Two fancy, English major-worthy words that rarely come up -- especially at telecommunications websites -- fit the current Netflix situation perfectly: hubris and schadenfreude.

Netflix, to review, has spent the better part of the past few months trying as hard as it can to alienate its customers. In July, the company annouced the bifurcation (I've decided to throw in as many needlessly big words into this post as possible) of its service into streaming and mail-based distribution models.

This makes sense because the clock is ticking ever more loudly on a video platform that relies on the U.S. Postal Service instead of Ethernet. PC World Senior Editor Tim Moynihan tells the story well in this video.

As sensible as it may be, the move was handled with all the subtlety and nuance of Paulie Walnuts collecting on a past-due loan. In addition, the company picked now to raise and, in a move probably not recommended in a time of customer uncertainty, changed its name. The original mail-based service soon will be called Qwikster.

The company has reduced its customer forecasts. The Street has run a survey that shows the impact of these misadventures:

According to The Street's poll, 43.8% will cancel one of the two services as a result, while 42% will cancel their Netflix subscription altogether. Only 14.2% of voters said the split-up makes no difference to them.



That leads us to schadenfreude and hubris. Netflix is the poster child of the online threat the cable industry has dealt with for the past couple of years. It isn't unreasonable that cable would take a bit of satisfaction -- schadenfreude -- in Netflix's missteps and misfortunes.

The cable industry should be familiar with the hubris of taking its customer base for granted. Perhaps company had to make the move from mail to broadband more definitively than it had been in the past. But there are ways to simultaneously move a business into the future without signaling to customers that it doesn't care if they come along or not.

Keep in mind that the problems being encountered by Netflix/Qwikster don't alleviate the overall threat to cable. There is no guarantee that the company won't right itself. In any case, there are more service providers to battle the industry on the horizon, such as Blockbuster Movie Pass. The service that will be available to Dish Network subscribers starting Saturday.

The missteps by Netflix actually could open the door to more competitors. For the cable industry, that indubitably would be quite a conundrum.

Carl Weinschenk is the Senior Editor for Broadband Technology Report. Contact him at carl@broadbandtechreport.com.

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