This week, two great examples of market forces and competition at work.

First, Netflix has learned a hard lesson about market forces in the wake of its recent price hike and amateurish handling of a change in the way it distributes movies. Incredibly, the company appears to have not anticipated that its customers would react quite negatively to both. Third quarter financials show that 800,000 subscribers have fled Netflix. You have to wonder how a CEO can survive a clear demonstration of his lack of respect for his customers and market forces.

Netflix’s downfall leaves Hastings — the only CEO the company has ever had — in a precarious position.

Once regarded as one of the savviest leaders in technology and entertainment, Hastings has turned into a punching bag for frustrated Netflix customers and shareholders. Many of them are still befuddled by his recent decision making.

After Netflix’s higher prices kicked in on Sept. 1, Hastings amplified the outrage by outlining a plan to toss the DVD rental business onto a separate website called Qwikster. The split from the Internet streaming service got panned so badly that Hastings reversed course in less than three weeks.

“I am not a quitter,” Hasting said Monday after the AP asked him if would heed some investor calls for him to resign. “We made some mistakes, but I think our 10-year track record is extremely positive. We are going to focus on making this a great global streaming business. I am very excited about that.”

 

The second example of competition in action came yesterday when I opened a checking account with a credit union that’s offering 2.51 percent interest for making a certain amount of debit transactions per month. The credit union is capitalizing on Bank of America’s much-panned move to charge customers a $5 fee for debit card use. When I closed my old account (not at B of A, by the way), the teller asked why I was leaving. When I told her it was for the higher interest rate being offered by her competitor, she shook her head and said her bank has lost a lot of customers over this and needs to do something about it. That “something” would be a win for consumers, which is what competition brings and why policies that thwart competition are so ill advised.