Movies and cinema have a long running connection with Americans and citizens of nations all over the globe. Taking a girlfriend, boyfriend, spouse, or even just a group of friends to the theatre for the next big movie has been a cherished activity in our culture for decades. That being said, the option to rent movies and watch them in one’s own home was an amazing concept that was most notably made available by Blockbuster. However, as technology increased and the internet became more and more prominent in everyday American homes, the idea of traveling to stores to rent movies became less appealing. This is where the story and emergence of a new company called Netflix begins. Netflix is an extremely successful company that brought forth a new innovation in the movie rental business, and probably could not have done so without proper and effective public relations and promotional work. The following paper will delve deeper into Netflix and their public relations work. It will describe how Netflix made a name for themselves and influenced public opinion, their successes in adapting to the social medias and technology of these times, their crisis management, and how their public relations compares to that of a non-profit organization.
The video rental juggernaut known as Netflix Inc. was created in 1997 by a man with a dream, and the drive to make that dream come true. Reed Hastings, the CEO of Netflix, changed how the world watched and received movies. Netflix is a video service that allows people to rent DVDs and have them delivered to their homes within a couple of days, as well as watch streaming video over the internet. This made it easier for people who live in small towns who do not have access to major movie rental retailers to receive any video of their choosing that would otherwise be unobtainable (Tryon, 2009). Neflix gave everyone the opportunity to have access to movies and television shows that they had never even heard of, or had the means to retrieve. In a sense, Reed Hastings has expanded the cinema and movie experience to all spans of the globe, giving everyone the chance to become “film buffs.” Today, Netflix has over three million users accessing their instant streaming service, viewing around 5 million television shows, movies, and biographies on their computer screens and television sets (Roth, 2009). A lot of work has gone into the success of Netflix and its services. Of course, Reed Hastings deserves much of the credit, but it has been the work of the public relations and promotional group that has turned Netflix from just a dream to a media powerhouse.
Public relations departments for companies have a variety of tools and processes at their disposal to reach the public. Netflix did this successfully by using surveys and rating systems to influence the public’s opinions on their services, as well as the products that they provide to them. When using the Netflix website, a customer has the option to rate movies that he or she has seen using a “five-star” scale. They have the opportunity to rate as many movies and television shows as they would like which, in turn, provides them with a massive list of movies that they might be interested in (Colombo, 2001). The company also used a lot of promotional deals and discounts to new subscribers. I know that this was a great idea because I was once a new subscriber myself. Usually, they would provide a month’s worth of service for free as a “trial” subscription. This is an excellent way to reach the public, gain their interest, and provide them with a no-risk way to test out the services that you have to offer. It also shows that Netflix had a great deal of pride and confidence in their product, as well as gave the public the perception that they would be satisfied enough to continue the subscription when the free trial was finished.
Netflix also used another great public relations tool while building their empire. That tool was to research and know the competition. Neflix knew that they were on to something big with providing DVDs to customers by mail. At the time, Blockbuster was still only operating through their “walk-in” rental stores and basically owned the movie rental market. Reed Hastings and Netflix knew that they had to keep close tabs on Blockbuster and their service offerings in order to organize their company and public relations campaigns. In an interview with CNN, Reed Hastings summed this process up in one sentence: “Never underestimate the competition.” By 2003, Blockbuster had not yet set up a competitive service, and Netflix figured that they would not invest much into it if they did. The next year, Blockbuster invested over five hundred million dollars into it (Abkowitz, 2009). Of course, this gave Netflix a run for their money, but because their public relations department kept up with what was going on, they had no problems keeping ahead of Blockbuster.
Obviously, the internet was the number one tool used by Netflix’s public relations. However, it was their use of email that helped reach the public even more. Email can be used in public relations in three ways. The first is one-to-one which is when a private email from one person is sent to another. The second is one-to-many which is when one message is sent from one person to any amount of their choosing. The third is many-to-many which uses software that enables many people to communicate through email facilitated conversation (Holtz, 2002). Netflix utilized this by giving subscribers the option to send recommendations to other users, as well as send invites and subscription “gifts” to friends through email. They also used email to send out millions of their “free trial” offers to people on a regular basis. Netflix not only used the internet primarily for their services, but as their public relations and promotional techniques. In this day and age, the internet is possibly the best way to reach a greater audience and Netflix proved this in the success that they gained in doing so. Netflix, however, took their product and public relations even further, going from just their website to other media outlets.
Netflix has moved from just providing DVDs to mail subscribers and internet movie streaming on the computer. Now, a subscriber has access to Netflix and its services through video game consoles, smart phones, and television sets. What was once just a DVD-by-mail provider has now become an easy to access service through different forms of media. Quite simply put, as the times and technology changes, Netflix adapts and changes with them. Microsoft, Nintendo, and Sony have all included Netflix access on their gaming consoles. Whether a person owns an Xbox360, Playstation3, or Wii they all have the capability of watching movies on their systems through Netflix. Today’s newest and best televisions now come with Netflix connect capabilities, as well. All it takes is on click of the remote control and a person can watch almost any movie of their choosing instantly. In this “Now-Generation,” organizations have to make sure that they are able to offer their products and services to the public as quickly as possible, and Netflix has shown that they are not lagging behind. Unfortunately, even the best companies face a crisis at some point, and Netflix has not been able to avoid being placed in this category.
In the early months of 2011, Netflix surprised their very populace, and very loyal customers with a 60 percent price hike in the monthly subscription fees with very little warning to the public. This caused a backlash of extremely angry customers, over thirty thousand angry posts on Netflix’s blog, and a rapid plummet of the company’s stocks ( VanderMey, 2011). Not only did the company anger its very large customer base, but it made a poor decision by naming it as a new service called Qwikster, which shared the same name as a marijuana addict on twitter. This, of course, was a bad move for public relations to not research anything else on the web that might share the same name chosen by Netflix and Reed Hastings. To make matters worse, the next few months were rather quiet from Hastings and other prominent Netflix figures. It seemed that Netflix was heading into a downward spiral because of their lack of action, but Hastings and the Netflix public relations helped close the wound at least a little before hitting the bottom.
How a company handles and manages a public relations crisis can either be the saving grace of that company, or the final nail in the coffin. One major step in crisis management is understanding the public’s view. Public scrutiny is an increasing demand that places pressure on companies to be alert, aware, and prepared to respond to a crisis in a manner that they will see fitting (Larkin & Regester, 2008). Some companies might hire a celebrity or another well-liked person to act as spokesperson for the company during the crisis. While this works for some, it is sometimes seen as an act of trying to deceive the public about the real issues at hand. Reed Hastings chose to act as the spokesperson himself, showing a lot of courage and putting himself in the line of fire. Most CEOs of companies shy away from the conflict, especially when they know that they have made a mistake in how their company and public relations handled a crisis situation. Hastings sent each customer an apology email with a video, appeared on ABC’s “Nightline,” and taken full responsibility for the choices made and the debacle that came after (VanderMey, 2011). While the company has certainly taken a hit, an apology and proposed plan from Netflix’s CEO, Reed Hastings, is the right move in a public relations campaign to gain back the trust of the public. There is always a risk in running a for-profit organization, but that does not mean that non-profit ones are always perfect.
The American Red Cross is a non-profit organization that has been providing disaster relief and help to millions of people across the globe for over one hundred years.
While their public relations campaigns may differ in most ways from those of Netflix’s, they do have some similarities. For one, Red Cross uses the internet to reach people all over the world as a main way of reaching the public. They also use surveys and polls to gain knowledge on the public’s opinion on the organization. Recently, the American Red Cross faced a public relations crisis during the aftermath of the devastating earthquakes in Haiti. Out of the $444 million dollars raised, only $111 million dollars of the donations were spent, causing an outrage and an investigation into the organizations handling of the funds (Attkisson, 2010). The American Red Cross handled the crisis similar to Netflix and their public relations department. Gail McGovern, head of the American Red Cross, chose to be the spokesperson herself saying: “Minus the 9 cents on overhead, 91 cents on the dollar will be going to Haiti. I give you my word and my commitment. I’m banking my integrity, my personal integrity on this statement (Attkisson, 2010).” Like Hastings and his company’s public relations campaign, the American Red Cross has put themselves on the line to guarantee the integrity and handling of the crises their organizations are involved in.
Companies and their success rely heavily on how they handle their public relations and promotional campaigns. Netflix proved this by innovating a new way of providing the public with an already existing product, while bettering it in ways never seen before. Their ability to reach the public in multiple medias, adapt to the change of technology, and correct their mistakes through the use of product public relations has made them one of the most successful and well-known organization in the world today. Even though Netflix’s purpose as a company differs from that of the American Red Cross, how they handle their public relations does not differ that much. A crisis can happen whether an organization is for-profit or non-profit. It is how those crises are managed by public relations that determine the future of the organization. In order to keep a positive perception in the eyes of the public, a company must know how to develop and utilize a successful public relations campaign. Netflix has done just that by winning over the public, and doing their best to overcome the obstacles put in front of them due to their own mistakes. Without productive public relations and promotional work, a company will have a long and bumpy road ahead of them.
Abkowitz, A. (2009, January 28). How Netflix Got Started. Retrieved from http://money.cnn.com/2009/01/27/news/newsmakers/hastings_netflix.fortune/
Attkisson, S. (2010, July 12). Following the Aid Money to Haiti. Retrieved from http://www.cbsnews.com/stories/2010/05/12/eveningnews/main6477611.shtml
Colombo, G. (2001). Capturing Customers.com: Radical Strategies for Selling and Marketing in the Wired World. Career Press, Inc. Retrieved from http://site.ebrary.com/lib/ashford/docDetail.action?docID=10007010&p00=netflix
Holtz, S. (2002). Public Relations on the Net (2ed). AMACOM Books. Retrieved from
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Larkin, J., Regester, M. (2008). Risk Issues and Crisis Management in Public Relations: A Casebook of Best Practices (4ed). Kogan Page Ltd. Retrieved from http://site.ebrary.com/lib/ashford/docDetail.action?docID=10233408&p00=public%20relations%20crisis%20management
Roth, D. (2009, September 21). Netflix Everywhere: Sorry Cable, You’re History. Retrieved from http://www.wired.com/techbiz/it/magazine/17-10/ff_netflix?currentPage=all
Tryon, C. (2009). Reinventing Cinema: Movies in the Age of Media Convergence. Rutgers University Press. Retrieved from http://site.ebrary.com/lib/ashford/search.action?p00=netflix
VanderMey, A. (2011, September 30). Netflix Flub: Not as bad as You Think. Retrieved from http://management.fortune.cnn.com/2011/09/30/netflix-flub/
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