Is This Netflix Promotion Pure Genius or Incredibly Stupid?

When I opened my email on Tuesday morning, Netflix (Nasdaq: NFLX  ) had a little surprise waiting inside.

A promotion from Google (Nasdaq: GOOG  ) Offers carried this headline: "$1 for 2 movie tickets when you watch TV shows and movies with Netflix."

What the ... ? Netflix doesn't sell tickets for anything, right? The service is all about streaming movie subscriptions. You don't buy, rent, or otherwise deal with anything even remotely like movie tickets on Netflix. Did the company just start a brand-new pay-per-view service?

The answer is a categorical "no," of course. But what Netflix actually is doing here speaks volumes about the company.

The Google offer bundles a Netflix trial with two tickets to your local movie theater. Watch three movies online, and then wait for some honest-to-goodness movie tickets in the mail.

What Netflix is saying here is that this service will satisfy your back-catalog needs, but we're happy to send you elsewhere for fresher fare. Now that I've seen this movie-theater tie-in, I wouldn't be surprised to find Netflix trials baked together with Coinstar's (Nasdaq: CSTR  ) Redbox vending machines.

After all, Netflix doesn't give two hoots about protecting its own DVD-mailing business, because the future is all digital. If a handful of Redbox rentals inspires consumers to take Netflix streams for a spin, Redbox can have the early-bird sales all to itself. Netflix simply plays in a whole 'nother sandbox.

Netflix makes up the cost of two movie tickets in about three months. The free tickets won't ship until you've kicked the service's tires a bit, and it's a fair bet that prospective subscribers already have the hardware to watch Netflix in the living room. All told, this is a clever bit of marketing. Netflix clearly doesn't mind thinking outside the box to repair the brand damage taken in the Qwikster debacle.

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Fool contributor Anders Bylund owns shares in Netflix and Google and has also created a bull call spread position on Netflix. He holds no other position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of Netflix and Google. Motley Fool newsletter services have recommended buying shares of Netflix and Google. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (3) | Recommend This Article (10)

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  • Report this Comment On June 20, 2012, at 4:59 PM, BioBat wrote:

    I'm going with incredibly stupid. Nowhere in the fine print does it say you have to actually pay for Netflix service so you could sign up, watch your 3 hours of movies/TV, wait for your tickets and then cancel the service. The result - Netflix loses money on the deal.

    All this says to me is Netflix is having a harder and harder time finding new customers and are having to pull out more stops (ie. higher customer acquisition costs) just to meet subscriber numbers.

    Netflix was a multibagger and made a lot of people a lot of money (myself included) but the story of its greatness is done and it's brand is still tainted in the eyes of many.

  • Report this Comment On June 20, 2012, at 6:25 PM, mountain8 wrote:

    Deffinition of many: over 5.

  • Report this Comment On June 21, 2012, at 2:15 PM, SeekTheFire wrote:

    I vote smart. "Pure Genius" is a bit too far. I think the public has forgotten about the Netflix snafu of last year. Interested investors have't forgotten, but we are not the foundation of Netflix customers.

    This promotion does show that once again Netflix is focused on its long term business: long tail video content subscriptions in the US and abroad. Using the free tickets to draw in movie lovers is smart. Once they taste Netflix streaming, I believe it will often prove to be too much of a value to do without. The kids section alone is worth it if you have kids!

    Netflix doesn't need new releases to be successful... and if they can continue to build partnerships with companies who do provide that, even better. They will be be seen as complimentary instead of competing. That is smart.

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