FBlog

I have been a loyal Netflix user for years now, and really believed they had everything going for them, a great product and a great brand.

Then, I am told that the DVD service is being spun off into something called Qwikster, and I am now going to have to have two accounts, go to separate websites for DVDs and streaming services, oh, and prices are going up 60%. Really Netflix? NOBODY stopped and thought this might anger your customers?

After a couple apology emails from the CEO, Reed Hastings, and a huge outcry from customers, Hastings finally announced that they were going to end the very short life of Qwikster. In the end, customers still had to endure the price hike, but the seamlessly integrated services would remain in tact.

So why would Netflix ever think this was a good idea in the first place? Without knowing the full legal specifics behind the deal, it appears to me that they failed to follow the first rule of brand architecture—your organizational structure does not have to match your brand architecture.

Netflix believed that the future of the business was in the streaming service (agree), and that DVD-by-mail is expensive with limited growth potential (agree again). In order to really let the streaming service thrive, Netflix felt it was necessary to separate the businesses and have them operate independently (arguable, but don’t disagree). Here is the kicker, because it now operates independently, the DVD-by-mail service needs a new brand, Qwikster (wrong!).

And again, the legal assumption I am making is it appears that even though the DVD service would operate independently, it would still be owned by the parent company. It was not being sold off to another party.

Netflix is known for in-home entertainment, regardless if it is by mail or streaming. It was the DVD-by-mail business that built the Netflix brand! The point here is that if you want to have the businesses operate independently, fine, but that does not mean you need a new brand–it can still be branded Netflix. Sometimes people say “don’t show your organizational underwear”. I don’t really care what you do behind the scenes, I just want to be able to get the same, seamless experience that I have grown to love. If your product and service is great, then we probably won’t complain as much about those price hikes either. Maybe.