Chart of the Day: Netflix's Image Darkens

By Daniel Indiviglio

For years, Netflix was loved by its customers. Then, last week happened. In a bonehead move, the company announced a pricing strategy shift, which would effectively require most customers to pay significantly more for their subscriptions for their plan to remain unchanged -- by as much as 60%. Those customers responded with a sharp, swift backlash. Angry reactions to Netflix's decision tore through Facebook, Twitter, and the blogosphere. By how much has consumers' perception of Netflix worsened?

The following chart provides the answer, via YouGov's BrandIndex, a daily index of brand perception among the public:

netflix brandindex.bmp

This is just plain ugly. The chart shows the companies' "Buzz Score," which is determined through polling, where YouGov asks people, "If you've heard anything about the brand in the last two weeks, through advertising, news or word of mouth, was it positive or negative?" The chart above leaves little doubt that the public was pretty unhappy with Netflix's recent decision.

Consumers had a far more positive perception of Netflix compared to its competitors for a long period of time until the rate hike announcement. Then, perception plummeted. It fell past Redbox, past DirecTV, and even briefly past Blockbuster (which declared bankruptcy last year and was purchased by Dish Network this year at auction). Now Netflix is neck-and-neck with Blockbuster, registering -6 on the index.

We'll have to watch to see how last week's announcement affects Netflix's revenue in the third quarter. The new pricing scheme doesn't go into effect until September 1st, so come August, we'll begin to see droves of customers switch to cheaper plans or drop the service entirely. Considering Americans' adverse reaction to the news, it would be pretty surprising if its revenue doesn't fall.

This article available online at:

http://www.theatlantic.com/business/archive/2011/07/chart-of-the-day-netflixs-image-darkens/242376/