We’ve looked at the facts surrounding what Netflix has been doing in the past couple of days. Now it’s time to wax lyrical with a heavy dose of opinion about the how this flourishing company seems to have made several wrong moves. But perhaps hasn’t, actually.
Netflix and/or Qwikster
It seems as though Netflix has completely lost the plot. Changing the pricing structure annoyed a lot of people, and some customers have reacted by canceling their subscriptions and badmouthing the company they once loved around the Web. But there is a definite method to Netflix’ supposed madness, and Reed Hastings is a logical man.
Netflix needed to make a choice for the future. For too long it has been trying to juggle both services, so why not give people a clear choice: Netflix for streaming, Qwikster for DVDs (and games). If Qwikster dies as physical formats become increasingly redundant then so be it, Netflix will still remain strong, resilient, and here for the long-haul.
Thinking Longterm
The name Qwikster is terrible. There are too many other companies with similar names, and it’s difficult to remember how to spell it. Furthermore Netflix didn’t bother securing the name on social networks, which could lead to branding problems in the future. But Qwikster as an idea is sound.
Sure, in the short-term this isn’t going to sit comfortably with Netflix customers who are happy being able to get both DVDs mailed and digital copies streamed via the one service. But Netflix is thinking longterm, as it has been since it first realized the future was in streaming rather than in mailing.
Making Sense Of It
It’s important also to remember that this is very much a U.S.-only issue. Netflix is expanding internationally, but with a streaming-only offering. It therefore makes sense to split the two services in the U.S. in order to retain the brand identity across borders.
The increase in revenue will help Netflix in its quest to add more content to the streaming service, which a lot of customers have been crying out for. Content isn’t cheap, particularly now that the studios and copyright-owners are accepting, albeit begrudgingly, the need to cater to this market.
The Future…
This move to separate its businesses into two distinct companies makes a lot of sense. But the customers who have built brought Netflix to this point are going to take a lot of persuading, and so, it would seem, are investors.
Perhaps I’m overly optimistic (on this subject at least) but I can see Netflix not only recovering but continuing to flourish into the future. The question is how long it will take to gain back the confidence of those using the service and those trading the company’s stock.
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