Netflix (Nasdaq: NFLX ) got caught -- stage-handed -- yesterday.
In an effort to drum up some buzz for yesterday's Canadian launch of its new streaming service, the flick flinger hired some extras to fill out the crowd.
The publicity stunt involved closing down a street block in Toronto, where a giant dollhouse was set up with three rooms showcasing Netflix's on-demand service where Canadians can pay $7.99 a month for unlimited streaming of its digital catalog. The media were invited, and Netflix didn't want to risk having jaded Canadians making disinterested glances at the spectacle, so it brought in excited extras.
This is already an ethical recipe for disaster, but things got worse when reporters wanted to interview consumers -- naturally drawn to those paid to be overly giddy about the service's launch.
It doesn't get any better for apologists who feel that extras may have overstepped their responsibilities by going through with media interviews. A leaked script instructs extras to "look really excited, particularly if asked by the MEDIA to do any interviews."
Netflix is a company that doesn't make many mistakes, so this blunder stands out.
This is a test that Netflix couldn't fail. The monthly $7.99 price point is already dubious, since it's just a buck less than what Netflix charges stateside subscribers for a plan that includes unlimited DVD rentals -- including new releases that are rarely available digitally -- as long as movie buffs only have one disc out at a time.
Success in Canada also opens the door to the rest of the world. Launching streaming-only plans doesn't involve building out costly distribution centers. It's just a matter of inking the right deals with moviemakers.
Right now, no one is doing what Netflix is doing, so yesterday's faux pas isn't fatal.
It won't always be that way.
Coinstar's (Nasdaq: CSTR ) Redbox is set to reveal its digital strategy next month. Amazon.com (Nasdaq: AMZN ) already has a minority stake in a DVD-rental service in Europe, and Canada is a logical expansion market if it wants to take on -- or acquire -- Zip.Ca. Apple (Nasdaq: AAPL ) and Google (Nasdaq: GOOG ) have set-top boxes coming out in a few weeks, and that may be the first step in launching streaming subscriptions.
In short, Netflix has what may seem to be an insurmountable lead over its sleeping slackers, but it can't afford to go backward. Yesterday's amateur stunt was Netflix shifting into reverse. Let's see if it's smart enough to shift back into drive before it puts the pedal to the metal.
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