Netflix knew that there would be a nasty backlash, and has already taken the subscriber defection into account in its financial forecasts. It still figures it will come out ahead.

That’s nice. But in fact, it fits in with the logic behind Netflix’s decision to change its pricing structure:

Last November when we launched our $7.99 unlimited streaming plan, DVDs by mail was treated as a $2 add on to our unlimited streaming plan. At the time, we didn’t anticipate offering DVD only plans. Since then we have realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members. Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs. Creating an unlimited DVDs by mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs by mail offering. Reflecting our confidence that DVDs by mail is a long-term business for us, we are also establishing a separate and distinct management team solely focused on DVDs by mail, led by Andy Rendich, our Chief Service and Operations Officer and an 11 year veteran of Netflix.

That’s a difficult paragraph to parse, but since I’m well versed in corporate-speak from working at a large corporation, I think I get it. It sounds like Netflix has decided to split its business into two units: online streaming and DVDs by mail. That is what they are explaining by saying that they “have realized that there is still a very large continuing demand for DVDs”. It’s not that Netflix didn’t know this before; they just decided the demand was big enough to justify a new business unit. That’s where the new management team comes in.

The explanation seems to be: we now have two business units and each business unit will charge users independently in order to remain profitable. What Netflix avoids addressing, though, is how this decision affects the current user experience offered by the company.

Here is how we use Netflix at home: stream some older TV shows for casual TV watching, with an occasional movie now and then, and supplement the titles not available for streaming with DVDs. I bet there are lots of other customers who use it exactly the same way.

The key to the service, in other words, is the fact that you can stream and supplement with DVDs when something is not available for streaming. This is what makes Netflix. And this is where the new pricing structure breaks down. It fails to address this special combination that is not offered by anyone else in the business. Take away the DVDs and you’ve got Hulu and Amazon Prime. Take away the streaming and you’ve got Redbox. But put them together and you’ve got Netflix.

To a Netflix customer, streaming and DVDs are inseparable.

To Netflix, they are two separate business units.

It’s a classic case of implementation-model design. The pricing is based on Netflix’s implementation model: DVDs by mail are markedly different from streaming content from a business perspective.

Compare this to a cable company that offers TV, internet, and telephone services. They have separate business units for each, but they still offer bundle pricing if you subscribe to more than one service. Why isn’t Netflix offering the same? This is what doesn’t make sense from the perspective of their users. The service we are receiving doesn’t change, yet the price increases dramatically because of what? Because they decided to have a re-org?

I predict that by the time September 1st rolls around, Netflix will offer a bundle plan for around $12-13/month. In the meantime, customers like myself are left wondering: do I cancel streaming or DVDs by mail? And if I cancel either of those, why not go with the cheaper (or even free) offerings from companies like Hulu, Amazon, or Redbox?

On a final note, here is a hint to Netflix marketing and user experience folks: if the description of your new pricing plan reads like a math problem, you’re doing it wrong.

Your current $11.99 a month membership for unlimited streaming and unlimited DVDs (including Blu-ray access) will be split into 2 distinct plans:

Plan 1: Unlimited Streaming (no DVDs) for $7.99 a month
Plan 2: Unlimited DVDs (including Blu-ray), 1 out at-a-time (no streaming)
for $9.99 a month

Your price for getting both of these plans will be $17.98 a month ($7.99 + $9.99).

Connect the dots from the green pin to the boxy thing

I never would have guessed that the best way to get something from Pennsylvania to Boston is through Tennessee. But then, geography was never my strong point.

(Memphis must be FedEx City.)

Here is where my expected experience completely deviated from the actual experience.

What I thought would happen is that Amazon would ship the other books right away and once the pre-ordered book became available, they would send that out. That’s how it works in regular stores – if something is available in-store, you can pay for that and walk out with it, but you can also pre-order something else at the same time and come get it when it becomes available. So I waited. A week went by and my books hadn’t arrived. Then another week went by. At this point, I got worried and logged back on to Amazon to see the status of my order. I was shocked to see that they hadn’t even shipped it yet! Apparently, they were holding back my entire order until the pre-ordered book became available.

While I understand that in order to save on shipping Amazon needs to combine orders into as few packages as possible, it was the last thing I would have expected that they would hold my entire order because one item was not available. It just doesn’t make sense. What Amazon should have done is one of three things:

1. Make it crystal clear that the order will not ship until the pre-ordered item is available.
2. Ship the available items right away and send the pre-ordered item when it’s available.
3. Don’t give customers the option to mix pre-ordered and available items in the same transaction.

While #2 is my preferred option, any of these would have been acceptable. As it was, I lost two weeks waiting for an order that didn’t come and then had to go through the trouble of canceling the entire order and re-purchasing the available items separately. Thankfully Confessions of a Public Speaker comes out next week and I’ll finally feel safe ordering it. And in the future, I’ll steer clear of Amazon’s “pre-order” system.

It’s been a couple of weeks since our round of usability tests at the SAP BusinessObjects User Conference (rolls right off the tongue, doesn’t it?) and I wanted to share a couple of thoughts about the experience. This was the first time we did usability tests since I joined the team back in March and it was also my first time meeting our community of users in person.

The first thing that struck me was the willingness of people who use Xcelsius to come and participate in the testing sessions. There were 13 sessions total, with room for one tester and one observer, and we had most of them filled before the conference even started. Our recruiters said they had people practically busting down the doors, trying to get into the sessions. This kind of support is exactly what we need in order to improve our product. For those who couldn’t make it, this is what it looked like:

The second thing that really impressed me was the quality of feedback we received. I have to admit, I was a little nervous going into these sessions because I know a lot of our users get frustrated with some of Xcelsius’ shortcomings. However, everyone that participated was very supportive and provided great constructive feedback. We learned a lot from watching people use the product – some of which we expected, and some that took us by surprise. Spending 13 hours looking at Xcelsius through the eyes of our customers was a very enlightening experience.

Finally, the thing I enjoyed most was meeting everyone in the Xcelsius user community in person. I follow many discussions online (including on LinkedIn, SDN, and Twitter) and it was very exciting to be able to put a face to the names of people I have come to respect through these discussions. I tried to meet as many people as I could, through lunches, networking events, the Xcelsius Community event, and the usability testing sessions. Through all of this I learned a lot about what people do with Xcelsius and their top concerns. There were two questions that I heard more than any others, though, and I’ll leave you with the answers here:

1. Q: When is the next version of Xcelsius coming out?

   A: Unfortunately, I can’t comment on that. All I can say is, “soon.”

2. Q: Are you related to Matt Lloyd?

   A: You know how some people are related by marriage? Well, Matt and I are related by product. Beyond that, there is no relation. It’s just an awesome last name.

Also, if you want to see photos from the Xcelsius Community event, you can find them on Flickr.

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The new Wolfram|Alpha “computational knowledge engine” is the coolest thing I’ve seen in a long while. My first impression was that this was just a big fancy calculator to help people solve NP-complete problems and complex differential equations and whatnot. Not that this wouldn’t be impressive in its own right, but it’s not exactly something I would use (though I could have used it back in college, when I was smart). The really cool thing about Worlfram|Alpha, though, is that it has a myriad of possible uses.

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Taken at the "Importance of Presence in Presentations" session at the
UPA Boston Mini Conference.

You can download the slides here (in PDF form) or here (in PPTX form).

Read my Delta horror story here.

They called my phone and asked to speak with Nick. I said that I was his wife. The woman on the line then proceeded to explain how they would like to ask Nick a few questions regarding the quality of service he received when he recently exchanged his phone at their service center and was there a better time to call? I said that I’d giver her his phone number, since she was calling me on my line. She responded with “Oh, if this is your number, then the call won’t be necessary. Thank you for your time!”

It’s baffling to me that they would call, asking for feedback, but really all they care about is checking off some box saying they called a certain number.