I awoke this morning to find an e-mail from Reed Hastings, CEO of Netflix, sitting in my queue and explaining to me why Netflix will no longer be in the DVD business. That chore will be handled by a new brand called Qwikster. Reed goes on to tell my how this is a great thing for us customers — we’ll have two different charges to our credit cards, two different websites to navigate, two different queues to manage — two of everything! Isn’t that just great?
All I could think of, laying there in bed, was, isn’t that just stupid? Despite their recent troubles with the unbundling of streaming from physical DVD subscriptions, Netflix still enjoys high brand equity. And, despite recent Wall Street handwringing over the latest correction to subscriber counts, Netflix is doing boffo at transitioning customers to streaming while maintaining a respectable DVD business that provides customer choice and one-stop shopping, without concern for platform. Qwikster, which I can barely spell, might as well be Blockbuster. This is not a customer-centric brand strategy.
So why change the brand? The only answer is that Netflix wants out of the physical DVD business altogether. Hastings is basically calling the DVD format dead. It’s an 8-track, a cassette, a VHS tape, a CD. He’s right, but penalizing his customer base at this juncture in the technological curve will only cost him customers and increase the churn on his business.