Crisis Communication Plan – Second Hour Response & Q&A

Success stories of the founder of Netflix

  1. What is the educational background of the founder of Netflix?
  2. The founder of Netflix, Reed Hasting, is someone whose education began in Bowdoin College, from where after graduating, he taught maths in Swaziland as a peace corp. After a stint as a maths teacher, he went back to college where he obtained a masters degree in Computer Science.
  3. What happened to the founder after graduating?
  4. After graduating in 1991, he founded Pure Software, a firm that dealt with providing solutions to computer software.
  5. How did Pure Software perform in the market?
  6. Pure Software performed tremendously in the market. It was able to offer very many solutions to clients and its growth over the years was rapid. In 1997, Rational Software acquired Pure Software for US $750million.
  7. After the acquisition of Pure Software, what happened to Hastings?
  8. After the acquisition of this firm, Hastings came up with the idea of coming up with a new firm that would be renting out videos to people at a fee.

A New Beginning for Hastings.

  1. Who did Hastings join hands with in his new venture and what was the venture?
  2. Hastings joined hands with Randolph to come up with an online version of renting DVDs. The firm that they would use to do this business was called Netflix. The new venture was meant to ensure that people could get their latest movies via online platforms and after watching the movies, they would return them to Netflix. By 1997, this firm had changed into a subscription service whereby it would now require its clients to subscribe to it to get the movies that they wanted.
  3. What went wrong at Netflix?
  4. As time went by, Netflix came up with an idea of having a branch that would deal solely with the delivery of the DVDs to clients. The name of this firm was Qwikster, which ironically was twitter handle that belonged to an individual by the name Jason Castilo. Castilo’s twitter profile was associated with bad things. Another thing that went wrong at Netflix was the rapid increase in their prices without doing any market surveys.
  5. What were some of the reactions of the clients?
  6. The clients were very angry at the decision by Netflix to split into two and its decision to increase its prices. The many clients felt that there was an increase of the price of renting the movies of about 60%. The clients felt that there was no justification in this rapid hiking of this fee. Some clients reacted by pulling out of the subscription program in very large numbers. In fact, by the end of the month after the increase in price, Netflix lost about a million clients.

Communication from Netflix

  1. Which strategy did Netflix use to communicate to its clients about price changes? Was it a good method?

Netflix chose to communicate to its clients through its blog. It meant that many people were not made aware immediately of the changes in prices. The strategy used by Netflix was not a good one since it had personal emails of the clients and it could have used them to communicate to the clients directly. Looking at what Ulmer, Sellnow and Seeger (2011) say, the mode of communication used by Netflix to pass its message to the clients was awrong. The reason is that some of the clients of this firm came to realize the price changes through social media.

  1. Did Netflix come forward to explain its position on the change in price?
  2. Netflix came out to give an explanation of why it had decided to increase its price. However, the manner in which it explained itself out was not pleasing to the clients. According to Athonissen (2008), whenever there is a crisis in a firm, the firm must communicate to its clients what is happening within the shortest time possible. Netflix did not do this and it meant that its clients were in the dark about what was happening since the official communication took a long time to come by.























Antonissen, P.F. (2008) Crisis Communication. London. Kogan Page.

Ulmer, R.R., Sellnow, T.L., Seeger, M.W. (2011)  Effective Crisis Communication. Thousand

Oaks, CA. Sage



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