Netflix Raises Prices – and No One Freaks Out

NETFLIX TV 150x150 Netflix Raises Prices   and No One Freaks Out

THE PR VERDICT: “A” (PR PERFECT) for Netflix.

This time they warned you – Netflix, that is. The on-demand streaming video service that scored one of the worst marketing and PR flops since the introduction of New Coke when they raised their rates in 2011. They announced a price increase for rentals last week, but this time in a way structured to keep existing customers happy – and investors, too.

You might recall Qwikster, the company’s ill-conceived DVD-only service, spun off in 2011 in the wake of a controversial and unpopular price hike that effectively doubled the cost of rentals. Subscribers rebelled and quit in droves, and Netflix reversed course, killing the service before it ever launched. It then spent much of the next year apologizing and begging customers to come back.

Clearly the company learned something from that experience. This time, Netflix moved methodically, initially raising the prospect of price increases months ago. It firmed up that news in late April with a letter to shareholders announcing a pending increase of “one or two” dollars. The final word came in an email to customers Friday – a $1 bump, but only for new customers, and no increase for existing members for two years. So far, the villagers have yet to light their torches or storm the castle.

THE PR VERDICT: “A” (PR Perfect) for Netflix, for taking the time to set appropriate expectations.

THE PR TAKEAWAY: Timing is everything – and that doesn’t always mean just picking the right moment. Netflix, looking to avoid another mass stampede of customers for the exits, wisely started telegraphing its intentions on pricing months before actually announcing the increase. This amounted to a period of test marketing, giving both Netflix subscribers and investors time to get used to the idea. Then, by grandfathering in existing customers at the current price for two years, Netflix actually won a measure of goodwill, solely becauset it set expectations of a price increase for everyone. Investors liked the news also, sending the company’s stock up on the increase.

Katie Holmes’s Stealth Divorce Bombshell

 Katie Holmess Stealth Divorce Bombshell

The PR Verdict: “A” (Gold Star!) for Katie Holmes and her stealth divorce bomb.

TomKat–Tom Cruise and Katie Holmes–are now officially over. Just like that. The surprising announcement that Holmes had started divorce proceedings seemed to catch her actor husband Cruise off guard. The filing was made on Thursday afternoon; the media went crazy on Friday. What happens now?

Speculation has already begun as to the cause of the marriage breakdown. Whispers of Holmes’s resistance to Cruise’s Scientology pals abound, as does the sneaking suspicion that the marriage was, from the start, a five-year contractual understanding. Other media speculate that Cruise’s alleged ambiguous sexuality is the genesis of the crisis, with one New York tabloid sarcastically commenting, “Holmes will keep the house while Cruise keeps the closet.”

Was the split expected? The gossip magazines had not speculated about Cruise’s third marriage in any meaningful way (despite ongoing low-level chatter). Cruise showed up alone at the recent premieres of his latest film Rock of Ages with no significant adverse comment. With the media off guard, the time for Holmes to file was now. At least on the PR front, this was minimally damaging, given the couple’s notoriety.

The PR Verdict: “A” (Gold Star!) for  Katie Holmes, whose divorce strategy is like a precision bomb. Taking the media by surprise means that phase one of the divorce agenda is owned by Homes, hands down.

The PR Takeaway:  Quick precision bombing has its advantages. Making a sudden filing before the weekend, while not making substantive comments keeps the scandal level relatively low. Holmes followed the template of her soon-to-be-ex-husband’s own divorce from second wife Nicole Kidman: no comment, no explanation–the PR exercise equivalent to ripping the band aid off quickly. No one ever really got to the bottom of the Kidman/Cruise divorce in part because it seemed so unexpected. The explanations this time around might be just as elusive.

Will Katie Holmes’s sudden, stealth divorce bomb shatter the media’s speculative attack? Give us your PR Verdict, below.

Hey ! Did you see that the Financial Times (Alphaville) republished our PRV on Barclays? Take a look: http://ftalphaville.ft.com/blog/2012/06/29/1065981/barclays-pr-rating-d/