Posts tagged brand
Did Hulu Make a Blockbuster Brand Blunder?

The blunder
Back in 2004, Blockbuster was done watching Netflix take market share. One of the key reasons we were gaining ground was because we could make the claim "No Late Fees."  We knew from research that it was probably the biggest pain point among customers who rented from Blockbuster.

Blockbuster, on the other hand, had built their business around fees. As of 2000almost 16% of their revenue was derived from late fees

So it was somewhat surprising to watch Blockbuster roll out their "End of Late Fees" policy with much fanfare. At first blush it seemed like a great idea. Until it didn't.

The "no late fee policy" turned out to be "late fees restructured" policy. Instead of paying a late fee, customers had a week to return the rented item or it would automatically convert to a sale or the customer would be charged a "re-stocking fee." 

Consumers weren't happy and neither were states' Attorney Generals who sued and won over the deceptive campaign. Worst of all it re-enforced already swelling resentment toward Blockbuster and served to tarnish their brand even further.

So, here we are 10 years later and Hulu has attempted to pull off the same misdirection with the rollout their new, much talked about "No Commercials" plan. It is their long-overdue answer to the ad-free, unlimited nature of Netflix. They've had lots of press and some excitement but hanging over it all is the painful fact that there are still commercials in the "No Commercials" plan (see image at the top of this article). Whereas Blockbuster danced around the issue by using semantics, Hulu has has taken it one step further and named a plan exactly what it is not. 

But will they pay for it?
Probably not. The reasons why this won't help deep-six Hulu the way "end of late fees" contributed to the Blockbuster death spiral is two-fold.

1/ We have gotten used to being mistreated to get what we want. Why else do we casually click a button agreeing to terms of service that if printed would amount to a twenty page contract that we would never sign? Because we want the shiny object. We want to get to the good stuff. We accept the terms, allow access to contacts, and allow services to monitor our online activity without a thought. Even the government's extensive surveillance program, once revealed, was largely met with semi-outrage. So, relative to all of that, this feels very mild.

2/ Current Hulu Plus subscribers (as well as former subscribers) have been paying for a service with commercials for years. They have been conditioned to expect that from Hulu. So, if they can pay a little more and see fewer commercials, that is a relative improvement, right?

Combine those reasons with the fact that there is no physical inconvenience and the "price" of accepting this new deceptive plan name is much lower. We may not like it but we're unlikely to do anything about it and Hulu is unlikely to re-name it.

Will it cause an uproar like the "end of late fees" campaign did? Probably not. Is it brand damaging to deceive consumers by selling them a plan that isn't what it says it is? Yep.

Thanks for reading the whole thing, if liked this piece, please feel free to share. 

I am currently a partner at Kaizen Creative Partnership, former Director in Marketing at Netflix. Connect with me here on LinkedIn or on Twitter.

Thanks to Christine Nagel for the editing assist and to Reed Michaelson (@rbmichae) for the screengrab via Twitter.