Netflix Streaming Snafu Highlights Friend-Foe Relationships

Christmas Eve 2012 was not an enjoyable one for Netflix, the popular streaming video service. That night, customers across Canada, Latin America and the U.S. hit snags in streaming the company’s movies and TV shows into their homes—via various devices like gaming consoles and DVD players.

The snafu was nowhere near the seriousness of the crisis that hit Netflix in 2011, when it announced it was increasing prices through the unbundling of its DVD and streaming video services, and then had to backtrack.

In fact, service outages are not at all uncommon (see RIM). But what makes this an interesting incident is that Netflix uses Amazon Web Services to stream its content to customers. With its Amazon’s own streaming service linked to its hot tablet device, the Kindle Fire, Netflix and Amazon are direct competitors in the streaming space.

So Neflix’s use of Amazon’s cloud servers struck a nerve online. Many of the comments regarding the Netflix service outage were along the lines of “Why does Netflix use Amazon’s servers? Netflix should have its own servers.”

From a communications standpoint, it’s interesting to note that Netflix didn’t overtly blame Amazon for the Christmas Eve service outages.  Instead, Netflix took the high road, stating, “”We are investigating exactly what happened and how it could have been prevented.”

In the business world—and particularly in technology—it’s often unclear which companies are friends or foes. In the case of the Big 4—Apple, Google, Facebook and Amazon—they may be foes but they are also willing to work with each other on initiatives that benefit each party. Such is the case of Netflix and Amazon.

The lesson here: With the economy still stalled, there will surely be more of these agreements in 2013. Corporate communicators need to be sensitive to partnerships with their own competitors, and exercise knowledge and good judgment in case something goes wrong.

Follow Scott Van Camp: @svancamp01

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