A Big Netflix No-No: Site Crashes, Leaving Millions Stumped

In the highly competitive online video game rental market, Netflix has had a nasty stroke of luck. According to the New York Times, the Netflix web site was out of service for several hours starting early on the morning of Monday, March 24, 2008. "This is an unanticipated outage", said Steve Swasey, a spokesman for Netflix. "Our engineers are working feverishly on it. We do apologize to our members for any inconvenience and we appreciate their patience."

The humble apology is certainly a good start, but it is unlikely to pacify all 7.5 million subscribers. So what will the long-term ramifications be for this popular service?

Netflix is one of two popular online rental services, along with Blockbuster. The two businesses are in a constant struggle for market share in this relatively new market. There are three key elements which draw consumers to online as opposed to store rentals: speed, convenience and reliability. Having been a customer of both Netflix and Blockbuster, I can say that I, personally, preferred Netflix on all three of these points. Blockbuster's one key advantage? If you just want to go into the store or, say, can't access their website, you can take the movie into a local Blockbuster outlet and trade it for a new one. This added service circumvents the subscriber's reliance on internet service to trade their rentals and, while we rarely used that particular feature, it was nice to know it was there. Now that the reliability of their website is in question, this will likely become a major problem for Netflix, whose entire existence hinges on their Internet presence.

Although accidental speed bumps like this can never come at a good time for a company, Netflix had been enjoying a rise in the value of their stocks, according to the New York Times. Due to the writer's strike, Netflix likely had an influx of new subscribers looking to use DVD rentals to catch up on their favorite series or find other new material to watch. This unintended product of the writer's strike gave Netflix a unique opportunity to introduce the quality of their service to a new market. Now that the writer's strike has ended, those subscribers might be more likely to cancel a service which they are less likely to use - and which suddenly seems less reliable.

It will be interesting to see what Netflix' ultimate response to the site outage will be. Will they go about their business as though nothing has happened, hoping it is an isolated incident which consumers will forget? Or will they woo their current subscribers with membership perks, and take steps to ensure their site's future reliability? It will be interesting to see which business approach they choose to take. I, for one, will wait until they take a stance on the issue before renewing my membership with Netflix.