On Netflix and Inflection Points Part 2

In part 1 I looked at changes to Netflix pricing but there’s a broader point here. Netflix thrives on inertia. They spend a fortune to get you to sign up knowing that inertia will keep you from leaving. You’ve checked the box and mentally you’re off on to other things.That’s why they (and a ton of other companies) spend a lot of money incentives for new customer acquisition, even though it makes existing customers feel ignored. 

But then something happens that makes customers reevaluate that decision and that’s really bad for inertia.

In my world, when companies put in a new ERP system people quit, leave or retire. Sometimes folks get canned. In most cases it has nothing to do with the new system. It’s simply a big enough change to overcome inertia. The change gives people an excuse to do things that they’ve been thinking about doing either consciously or subconsciously.  Typically folks have been ready for a change for a while, they just need something to get them off the couch.

In the case of Netflix, we’ve wound our queue down to zero a couple of times over the last year. When really want to see a new release outside of a theater, we would drop the $3.99 to see it on demand via our cable company. In short, we were kind of bored but we didn’t have an incentive to quit paying our $10 a month. Now we do.

The new Netflix pricing takes effect September 1 leaving Netflix a pretty short window to get us to change our mind. Then they’ll spend a fortune trying to get us back. Breaking inertia is expensive.

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