Netflix and Other Short-Sighted Business Failures

COMMENTARY | When Netflix raised their rates and split their packages into streaming and DVD-by-mail, the customer feedback was a torrential stream of negative reviews and promises to drop the service. Even with the writing on the wall, Netflix held firm to their price restructuring, even after a mass exodus that amounted to their first losing month in years.

That is why I was so surprised when Netflix CEO Reed Hastings announced Monday, October 10, that they were going to abandon their plans to launch Qwikster, a separate service for their DVD-by-mail division. Here are some other companies that are in the habit of fixing things that aren't broken, and are in a desperate need of a change back to some of their previous business practices.

Facebook

It is no surprise that customers react to changes on Facebook about as favorably as a termite infestation. A recent overhaul to the news feed created an uproar that lasted three days, and that was before the F8 summit where Mark Zuckerberg announced the most sweeping changes to the Facebook platform since its early days. While I liked the old, simple format better, changing back would just cause more backlash because the customers are more concerned about change itself than the new format.

Hewlett Packard

What would you think if Oscar Mayer announced tomorrow that they would stop making bologna? Well that is exactly the feeling millions of customers got when Hewlett Packard announced that they would discontinue the production of PCs, tablets and phones, instead focusing on software. The first top-end computer my family ever purchased was a Hewlett Packard, and many millennials consider Hewlett Packard a forerunner of Dell. The brand recognition for HP computers may not be what it once was, but I cannot think of a single other HP product that I have bought in my lifetime. I cannot even think of another HP product that exists, period. So if Hewlett Packard isn't selling computers, just what exactly do they plan on doing, and who is going to build desktop PCs now?

Nintendo

Filling a certain niche is good business, and usually when you jump in line behind other companies that do the same thing, you are not going to be terribly successful. One of the exceptions to this is the business practices of Nintendo, starting with the advent of the GameCube. The GameCube bucked conventional CDs and instead opted to play micro discs and focus on a younger demographic. With the Wii, Nintendo targeted the party gamers, people interested in motion input and parsimonious casual gamers. They neglected hardcore gamers and the large following of users who enjoyed deep and intriguing Nintendo titles. As Microsoft launched the Kinect as a peripheral, Wii sales plummeted because now it was possible to have the best of both worlds. From looking at the previews of the Nintendo U, it still seems like Nintendo still doesn't realize what real gamers want.