This morning, Netflix announced that they are officially splitting their DVD and the Streaming services into two separate companies.  They will call the DVD service Qwikster, while the streaming service will retain the name Netflix.  This is their answer to the criticism received for the increased prices of a few months ago for their combined service, which caused over 1 million subscribers to leave.

Huh?

Reed Hastings, founder and CEO, starts today’s announcement by saying, “I messed up…,” then goes on to compound the mess.

Don’t they understand anything about branding?

Here is the problem:  They have done a great job of establishing Netflix as a brand for home movie entertainment.  Now they are changing the name (the brand) to have a completely different meaning.  It would be as if Google decided that the name Google was better applied to their new Mobile Phone business and that the search business would now be called GoFast.  That would flush all their years of successfully associating the services that work so well together under the Google brand.

Netflix could have solved their PR problem of a few months ago by rolling back prices to what they were before unbundling the DVD and streaming services.  Now they have compounded their problem by abandoning a formerly great brand associated with innovative entertainment for the home.

I think when Reed Hastings said that he messed up, he was referring to the past.  I think this is his biggest mess so far.

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