Cazenovia Remember “New Coke”? The Coca-Cola Company’s 1985 attempt to change its flagship drink’s formula was a marketing debacle MBA candidates still study because it throws light on a law of the universe: If it’s not broke, don’t fix it.
Southerners, who live in the region where Coke originated, compared the change to defeat in the Civil War. Ads for New Coke were massively booed when they appeared on the scoreboards of baseball stadiums.
Even Fidel Castro complained. Apparently, he drinks a lot of the stuff.
How does he get it? How do Wall Street lawyers get Cuban cigars?
If it’s not broke, don’t fix it. Someone ought to tell the folks at Netflix. Recently Netflix, a company that has changed the T.V. and movie viewing habits of millions, implemented a series of changes that inspired a New Coke-like customer reaction.
Prominent among these changes is a new pricing scheme that raised the monthly rate to receive streamed video online plus DVDs by mail from $10 to $16.
The change induced customers to cancel their subscriptions in significantly greater numbers than expected — a million in total. The wave of cancellations caused a projected quarterly loss in customers for only the second time in Netflix’s history.
The company’s stock dropped by almost 19 percent, closing at $169.25. The drop caps a longer decline. In July, Netflix stock peaked at $304.79.
Then in another development — one far more damaging to Netflix in my estimation — the premium cable channel Starz announced that it and Netflix are parting ways in February when their contract expires.
If you stream movies from Netflix over the internet, you quickly notice how many of the best films come from Starz. In fact, the premium Sony and Disney films Starz supplies to Netflix had a lot to do with Netflix’s ability to quickly gain a broad customer base when it started its streaming service several years ago.