What Publishers Can Learn From Netflix/Qwikster

After hearing about the ending of Qwikster before it even began, and watching my Twitter feed on it, I had some thoughts. Gareth-Michael Skarka said it first, in a tweet:

“Clever” cynics snarking about Netflix/Qwikster — Ability to change direction to course-correct quickly is an ASSET in a company, dumbass.

He’s totally right. Being a publisher in a fast-moving world (thank you, Internet, for that) means having to experiment and adapt. Business models that worked ten years ago suffer today, due to shifting prices, consumer habits, changing technology, and a thousand little things. Prices from ten years ago don’t hold up today, not if you want to keep the same margin to help your growth. So we have to play around with ideas, experiment with new models and methods.

Sometimes, they work. People are finding great successes with Kickstarter, for instance. But sometimes they don’t. And here’s where we can look at the Netflix/Qwikster debacle.

I’m sure you know the story, but if you don’t, you can google for the news. In short:

  • Netflix increased its prices, causing a backlash as they rarely do this and the hike was felt as a considerable amount.
  • Along with that, Netflix changed its billing scheme, causing confusion.
  • People were loud about their displeasure and many vocally considered canceling the service.
  • Reed Hastings offered a (rather awkward) apology, and introduced Qwikster.
  • Then in response to customers, they killed Qwikster before it even started.

Which is to say, by introducing Qwikster, Netflix decided to experiment rather than accept the situation. That is, in general, a good thing. Companies that don’t experiment & try to adapt will be overtaken by those that do. To bring this back around to RPG Publishing land, we can look at some examples of experimenting:

  • Wizards of the Coast doing the Open Gaming License for D&D 3/e & d20.
  • Posthuman Studios releasing Eclipse Phase as Creative Commons and supporting torrenting their books.
  • The early indie publishers doing things purely digitally, notably Ron Edwards’ Sorcerer (back before PDFs were even a thing).
  • Fred Hicks’ dedication to transparency with what Evil Hat Productions is doing.
  • Greg Stolze‘s Ransom model, the godfather of microfunding in RPGland.
  • Folks that put out free versions of their games, from Steve Jackson Games’ GURPS Lite to John Harper’s Lady Blackbird.
  • The Bits & Mortar initiative, where publishers offer their PDFs alongside their physical books, and allow participating retailers to provide those PDFs when they sell the physical books.
  • And on and on…

Sometimes these experiments work. Sometimes they don’t. Some experiments will work for certain people or companies and fail for others. Many have shorter lifespans than initially hoped. Here’s the thing: when you see that an experiment isn’t working, you need to pull out. The Sunk Cost Fallacy will fuck you[1]. And that’s what happened with Netflix. It got so much backlash from the Qwikster thing that it responded by killing the experiment.

The market is the ultimate Darwinian model. If you don’t adapt, you don’t survive. That’s what Netflix is trying. Will they succeed? I don’t know; there are many doomsayers who talk about Netflix because it’s so visible. But you can’t succeed if you don’t try, and you can’t succeed if you hold on to bad business ideas.[2]

The other thing we can learn from this debacle? How not to do PR. Adapting to survive only works if you can convince people that you should survive. It helps if you can bring people into the conversation than just make seemingly arbitrary decisions. But that’s easier to do on our small scale than it is with a large company like Netflix.

– Ryan

[1] Which is a topic for design at some point.

[2] This isn’t to say you’ll entirely die off, but you’ll only be supported by diehards. I see this from the publishers who do extremely shitty jobs of self-fulfillment and generate enmity against them by customers they keep disservicing. If that’s “success” to you, well, meh. (And something else that can be learned from Netflix: how to promptly fucking ship.)


8 Responses to What Publishers Can Learn From Netflix/Qwikster

  1. I think a large part of the equation here is customer trust. If you show your customers that you are trustworthy, this type of thing can work well. In that case, you’re selling people on the company, not the product. Branding. I buy the game because I trust Ryan Macklin to publish quality stuff.

    This all assumes, of course, that your product is good too. No amount of trust will make up for a crappy product in my opinion.

    • Ryan Macklin says:

      Totally, I think that’s another axis on the imaginary graph I’m now making up.

      People may want a game I produce, but if I use crappy business models and can’t afford to keep producing games… (which in turn I see is a big way to kill trust — especially if I take money for a game I don’t deliver on).

      I talked about trust, from another angle, a bit ago when talking about Negative Emotional Contexts.

      – Ryan

  2. Codrus says:

    This comment is more about Netflix than the idea of experimenting. I like the idea of experimenting with new models and designs. :)

    The apology was poorly accepted because it wasn’t much of an apology. It essentially was “We’re sorry, and to make up for it, we’re going to do this other thing we’ve already been planning to do.”

    I’m convinced that announcing the business split was focused on Wall Street, not on Netflix customers. There was nothing in that post that actually could show how maintaining two of everything was good for me as a customer. It makes sense if you assume that it is part of a plan to split the company and sell one or both parts to someone else. (Depending on your POV, you might see that as selling the DVD business because it is eventually going to wither or selling the streaming business to someone with deep pockets).

    The original price hike didn’t bother me at all — I get more value out of netflix than I pay them. The Quikster split annoyed me because there wasn’t anything in that change that helped me, but they tried to spin it as if this was in response to the earlier griping.

    I suppose, to get back on topic: Experiment, but make decisions that run the business in a sustainable way that doesn’t screw over your customers. And if you have to give bad news to the customer, do so in an honest, transparent fashion. Don’t spin it so much that you appear to be disingenuous.

    • Codrus says:

      Er, I should add: I considered the reversal from Quikster to have been handled appropriately. It felt like a genuine “we fucked up and we’re sorry” message.

    • Ryan Macklin says:

      Yeah, there are plenty of negative examples in that to learn from. Man alive, there are. But I don’t think it detracts from the point I’m presenting.

      – Ryan

    • Codrus says:

      I guess it comes down to that I don’t think of Quikster as an experiment along the lines you suggest in the rest of the post. When I read the post, I felt that the second part makes perfect sense — old models never last forever — but I didn’t think Netflix was a good lead-in example. The example didn’t greatly detract from the point you wanted to make, and you did get to the PR problems as a key part of changing your business model, which is a good point.

    • Ryan Macklin says:

      Sure. Some things trigger thoughts. That’s why I tend to tag such posts with “thoughts on“.

      The parallels are far from perfect, and perhaps I should have said that in the post, but at the time of writing it I figured I didn’t need to. Wanted to keep it punchy.

      – Ryan

  3. Rob Bodine says:

    Your analogy to Darwinism hits home, but it’s very hard for companies to properly gauge the percentage of their customer base that the squeaky wheels represent. (I’m speaking generally here. I have no dog in the Netfliz/Qwickster hunt.) People have an unhealthy sense of entitlement to whatever they want and often act as if corporations have unlimited resources. Also, they love drama and love to complain. The internet adds a level of anonymity to the equation that encourages harsher statements and the uncontrollable spread of information, both relevant and irrelevant. Does the ease of the internet result in feedback from a broader sampling of the customer base, or is it still just a small number of squeaky wheels? Does the anonymity result in mere trolling, and are the people complaining doing so merely for the sake of complaining, or are the complaints legitimate? With a finite amount of resources that can be dedicated to addressing complaints, it hard to sort the legitimate complaints from the ridiculous ones, and even harder to pinpoint what the majority of consumers really want. They don’t want to discourage feedback because, if they do, people will simply move on to a competitor without providing explanations. I don’t envy those responsible for making such evaluations.