"Strategy + Business" magazine says "Netflix wasn't all wrong" in its strategic changes

The saga of Netflix's shift to streaming from its start as a video-by-mail company continues to unfold. As we've noted in several posts, Netflix and its chairman, Reed Hastings, were derided for the split of the two businesses, the dramatic pricing changes (subscribers who had both streaming and video-by-mail - like me! - saw up to a 60% increase in their monthly bills) and the way they communicated it to their customers.

Now, several months down the line, the opinions of Netflix's moves are more mixed. In Booz & Co.'s Strategy + Business magazine, authors Ken Favaro and Kasturi Rangan provide an early reassessment of Netflix's mistakes.

Favaro and Rangan criticize the timing of Netflix's moves, but note that

Netflix likely judged correctly that its mail business was going to be cannibalized and ultimately replaced by streaming. But no one can really know for sure how fast that might happen. Moving too early can be disastrous, as Netflix learned, but moving too late can be even worse — as companies such as Kodak, Research in Motion, and Nokia have discovered.

In the end, they admit that, while Hastings made avoidable mistakes in communication and assessing customer reaction, it's impossible to make a bold strategic move without breaking some glass:

Customer reaction to any change in a company’s value proposition is difficult to know a priori, even with the best market research. Having the agility to change your choices when new information comes to light is essential to strategy success. This type of agility, no matter what mistakes Netflix made, may save the company in the end.