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.

The PRV Report Card: This Week’s Winners & Losers

 The PRV Report Card: This Weeks Winners & LosersPR WINNER OF THE WEEK: “A” (PR PERFECT) to Lupita Nyong’o, whose star continues to rise with this week’s announcement that she won the cover of People Magazine’s “Most Beautiful” issue. This can be attributed to Nyong’o’s obvious beauty – a welcome sign that the days when magazines shied away from putting women of color on covers are over – her Oscar-winning performance in 12 Years a Slave, and doubtless a team of PRs and managers who have kept Nyong’o in the public eye, steadily but not to the point of over-saturation. Congratulations, Team Lupita.

 The PRV Report Card: This Weeks Winners & LosersPR LOSER OF THE WEEK: “F” (FULL FIASCO) to Bryan Singer, director of X-Men: Days of Future Past. Singer pulled out of publicity appearances at last week’s WonderCon and will likely remain behind the scenes after a lawsuit was filed accusing him and three other men of sex abuse of minors. “I do not want these fictitious claims to divert ANY attention from X-Men,” Singer’s PR statement read. 20th Century Fox, which will release X-Men next month, issued a terse comment a week ago: “This is a personal matter, which Bryan Singer and his representatives are addressing separately.” Time to distance a director accused of abusing teenagers from a product marketed to teenagers.

rove The PRV Report Card: This Weeks Winners & LosersTHE PRV “THERE’S NO ‘THERE’ THERE” AWARD to Karl Rove, Bill Kristol and other Republican-Conservative strategists/pundits, for stepping in to “unskew” a New York Times poll favorable to Obamacare and Democratic Senate candidates. The Times poll, conducted with the Kaiser Family Foundation, found Democrats running ahead of or, at worst, neck and neck with GOP opponents in traditionally conservative Southern states. “Badly done,” Rove said of the poll. Kristol and the Republican National Committee were more snarky. But none, including Rove, who famously freaked when Fox News called the Presidential election for Obama two years ago, offered more than opinion to refute the poll.

Lack of ‘Frozen’ Merch Means Chilly PR for Disney

princess elsa 150x150 Lack of ‘Frozen’ Merch Means Chilly PR for Disney

THE PR VERDICT: “D” (PR Problematic) for Disney. (Pictured: Princess Elsa from Frozen.)

Call it a “good news, bad news” scenario. Disney is currently enjoying the success of its movie Frozen becoming the highest-grossing animated film of all time. They can’t gloat for too long, though; the news has shifted from accolades to tears of frustration and temper tantrums, both from children and adults. The problem? A shortage of Frozen merchandise.

Social media hath no fury like mommies frustrated by not being able to buy their children what they want. Specifically, the Princess Elsa dress – a sparkly blue gown like the one worn by Frozen’s heroine. The movie was already a hit, the DVD is now out and reaching an even larger audience, and worldwide demand for the dress far exceeds supply. The costume, usually around $50 in the US, is apparently going for over $1000 on ebay. If you can find one.

When has Disney ever underestimated the popularity of one of its movies? It’s possible that this film became bigger than even the Mouse House foresaw. But with frustrations raging online and in the media from mothers who can’t get what their kids want, Disney had better grant some wishes soon.

THE PR VERDICT: “D” (PR Problematic) for Disney. The low grade is not for running out of merchandise, but because running out implies underestimating their own success, and being unable to rectify the situation.

THE PR TAKEAWAY: Spin! Spin like a princess at the ball, and then be a fairy godmother, granting your consumers’ wishes. First thing should be a statement saying how fantastic it is that your widgets were so popular that demand for them exceeded supply. Second is getting more widgets out quickly, in this case before a sweet animated movie invokes episodes more like The Hunger Games. This is a problem every company dreams of, but action keeps it from turning into a PR nightmare.

Netflix: From Doghouse to Darling

netflix Netflix: From Doghouse to Darling

THE PR VERDICT: “A” (PR Perfect) to Netflix, for making its own luck.

Sometimes, the famously fickle PR gods send you a gift, and if you’re lucky, smart, or both, you’ll get a chance to use it. This week’s beneficiary: Netflix. Two years ago, the video streaming and DVD rental company was a case study – literally – on how to fail a thriving enterprise, with questionable pricing and business decisions that sent subscribers stampeding for the exits. Netflix became the poster child for PR ignorance and customer neglect, losing nearly one million subscribers over a matter of months.

Then, a chastened Netflix started to turn it around. It reversed unpopular business decisions and issued a sincere (and persistent) mea culpa. It aligned its communications strategy with its business plan, breaking new ground for a streaming service by providing original content. Today, its subscriber base surpasses HBO’s and its stock price is six times what it was only a year ago. Quarterly earnings are next week.

And the gift? Just a humorous online chat between a funny, friendly, and helpful Netflix customer service representative and a user with a video playback problem. A screenshot of the Star Trek-themed dialogue was posted online on Imgur and Reddit and is getting wider attention. Netflix is getting free publicity from it – earned the hard way, and through hard work.

THE PR VERDICT: “A” (PR Perfect) for Netflix, for a turnaround in tone, culture, and attitude that turned around its business.

THE PR TAKEAWAY: Good communication is contagious. Netflix’s earnest soul-searching two years ago, translated into words and actions, now appears to touch even the most routine business activities. Granted, maybe not all of Netflix’s help calls end as happily – customer service is a weak spot for many firms. But this exchange garnered publicity precisely because it speaks to a prevailing positive mindset that has formed about the company, one that seems to attract great employees as well as loyal, happy customers. Netflix provides an object lesson in how good conmunications helps throughout an organization. Its little PR gift also confirms that luck doesn’t just happen; you make your own.

Witherspoon’s Withering PR Moment

 Witherspoons Withering PR Moment

The PR Verdict: “F” (Full Fiasco) for Reese Witherspoon, from arrest to partial apology.

The producers of the new film Mud, starring Reese Witherspoon, were probably hoping for publicity of a different sort for this week’s premiere. Instead of hitting the talk show circuit as planned, Witherspoon made the front pages after being arrested outside Atlanta for boozily mouthing off to a Georgia state trooper.

The officer had pulled over the actress and her husband, Hollywood agent Jim Toth, after seeing Toth driving erratically. As Toth was being arrested on suspicion of drunken driving, Witherspoon became unruly, belittling the trooper, refusing to stay in the car, and pulling out the classic ill-advised celebrity line: “Do you know who I am?”  She was taken away in handcuffs, charged with disorderly conduct, and spent the night in jail.

What an embarrassment for Witherspoon, an actress of the American Sweetheart variety with now-punchline ironic credits such as Walk the Line and Legally Blonde. As a 37-year-old mother of three, she can’t claim youthful indiscretion for this performance. Witherspoon canceled several scheduled appearances to promote her latest movie and issued an apology through her publicist.

Conspicuous by its absence in Witherspoon’s mea culpa, though, was a lack of acknowledgement of the seriousness of her and her husband’s alleged actions. The truly problematic issue here isn’t the disorderly conduct charge, but the couple getting into a car allegedly – and in her case admittedly – intoxicated. “Friends” like E! Host Chelsea Handler downplaying the incident didn’t improve on the situation. Given the broader implications of the arrests, Handler and others would do well to steer clear of this mess.

THE PR VERDICT:  “F” (Full Fiasco) for Reese Witherspoon, from the arrest to the partial apology.

THE PR TAKEAWAY: Note to celebrities: Sometimes it’s not all about you. Throughout this unfortunate episode, Witherspoon doesn’t appear to have thought about anyone else besides herself and her husband. Though she may be under a legal directive to say little given the pending criminal charges, one hopes her image rehab will involve admitting their lack of judgment and perhaps taking a visible stand against drunk driving. Fortunately for the tipsy couple – and everyone else on the road – the only damage done here was on the PR front.

The Great PR Behind Gatsby

 The Great PR Behind Gatsby

THE PR VERDICT: “A” (PR Perfect) for Gatsby’s PR campaign.

Ask any author, artist, or musician about the PR surrounding their latest offering and the persistent complaint is almost always the same: The Marketing and PR departments had no idea what they were doing. The PR was weak, uncoordinated, and didn’t happen. The PR punched below its weight. No one, it seems, is ever satisfied.

One example that seems, so far, to have broken that convention is the advance PR for The Great Gatsby. The latest film adaptation of F. Scott Fitzgerald’s 1925 novel of the same name, the movie was directed and co-written by Baz Luhrmann and stars Leonardo di Caprio, Tobey Maguire, and Carey Mulligan. Opening in the summer, its launch has been preceded by a slick PR campaign that has covered all the bases.

From Mulligan’s cover on the May issue of Vogue to a lengthy feature in Architectural Digest about the sets used in the film, magazines have been waxing lyrical about the movie. Venerable retailer Brooks Bros. has just launched a fashion line in honor of the film, launched with an exhibition of the film’s costumes in London. Stage two involves a blizzard of interviews with the director and cast about Gatsby and its hold on America. This PR is firing on all cylinders.

THE PR VERDICT: “A” (PR Perfect) for Gatsby’s PR campaign.

THE PR TAKEAWAY: Start with a myth and work from there. What’s impressive about the PR building up to the film’s opening is how pervasive the coverage has been. From an elaborate social media program that has strategically placed the movie trailer on multiple sites to articles and interviews highlighting the fashion and interiors of America’s favorite age, this is one launch that has taken full advantage of the public’s ongoing fascination with the Gatsby myth. It goes to prove that with good material and strategic thinking, PR can launch a punch way above its weight.

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/