You almost have to feel sorry for Netflix. Once a towering paragon of transformative online business and delivery models, the entertainment giant has done a face plant.
Netflix launched in 1997. Using an online ordering system (the “Net” in “Netflix”), customers could choose from a huge selection of movies (the “flix”) and receive them by mail under a flat monthly subscription rate. This unique delivery system, combined with the ubiquitous red banner ads that were inescapable for many years, served to make Netflix such a powerhouse that it drove brick-and-mortar stores to bankruptcy.
A year ago, Netflix added streaming video, wisely choosing not to give this offering its own brand name. Instead, it was generically called “Watch Instantly” and was offered to subscription customers at no additional cost. Then, this past July, Netflix split its DVD-by-mail and streaming services into two separately priced offerings—a strategic decision that set off a firestorm of protest.
Adding insult to injury, they branded their DVD-by-mail service, “Quikster.” Quikster. Of all the benefits they could have named this service around—choice, flexibility, convenience, etc.), they chose speed?
In what universe is it quicker to order a movie by mail than it is to stream over the Internet?
And why would they want their brand name to remind customers of other failed Internet ventures like Napster and Friendster?
Pricing issues aside, this service did not need its own brand name. Netflix’s two offerings could have been more simply articulated as generic services under the Netflix brand, i.e., “Netflix DVDs” and “Netflix Streaming” or some such.
Eventually, as broadband infrastructure improves and smooth, seamless streaming becomes more viable in more homes (while the cost of postal delivery continues to increase), DVDs-by-mail will go the way of the dodo. Netflix will deliver the pure “online + movies” offering its name communicates best.
The only reason I can see to brand the DVD-by-mail service separately is if Netflix is planning to sell off this part of their business.
But unfortunately, Netflix will lose an estimated one million customers due to the pricing brouhaha, which has caused its stock price to plummet.
For the foreseeable future, Netflix must hang on to its cash cow. It’s a shame they scarred it with such a silly brand.