Netflix Focuses On Building Brand, New Disney Deal

by David Goetzl, Jan 24, 2013, 1:54 PM

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In a world where calling cable cord-cutting results in pleas to stay, Netflix CEO Reed Hastings has a different approach. Let them leave with little hassle and they’re more likely to come back, he says.
 
“We really want to make it easy to quit,” he said. “I know that sounds strange.”
 
Certainly, Netflix doesn’t want to encourage defections, but it believes making a payment system that allows users to leave and return -- along with no contract -- is a way to entice customers and build loyalty. Of course, unlike a cable operator, its single price doesn’t allow for offers of free HBO for a month or an opportunity to take a lower-cost package.
 
Speaking to analysts, Hastings reiterated that the company has no plans to increase the monthly cost of its U.S. streaming service above $7.99. The company reported an addition of 2 million-plus streaming customers in the fourth quarter to close at near 27 million. 

Netflix predicts that will come in close to 29 million at the end of the current quarter.  
 
The company continues to rebuild its brand reputation after the 2011 move to split the DVD-by-mail business from the streaming service, resulting in a price increase for customers wanting both. Hastings has indicated that it would take multiple years, insisting the company has emerged from the worst. “You might say we’re on probation at this point, so we’re out of jail,” he said, adding “we’ve still got a year and half of probation” to go.
 
Netflix, which is focused on securing exclusive content through a new deal with Disney that it is commissioning, doesn’t plan any large increases in marketing, relying heavily on word-of-mouth, which could be helped by a new Facebook feature. There is also the chance to improve the recommendation engine on the site to prompt users to watch programming they’re likely to appreciate.
 
Netflix began 2012 with about 22 million streaming subscribers and closed with 27 million-plus. It is facing increased competition from Amazon Prime, Hulu Plus and Redbox Instant, so exclusive content could be a differentiator. The company said it looked at its 100 most-viewed movies and 100 most-viewed TV shows. Of the 200, 113 aren’t available on any of the other services. Among the remaining 73, Amazon Prime offers the most at 73.

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