Question
Why didn't Netflix retain (part of) their brand name when they split their company?
Answer
It was a courageous, by the book move, as far as the naming choices go. I don't know enough about the other things the company is getting criticized for, but if this approach to partitioning and repositioning the brand is the only reason they are getting pummeled, I'd say now is a good time to buy the stock. If they have other issues, then of course that's a different matter.
"Netflix" is a valuable brand. It fits streaming perfectly (Net - flicks). Yet, because its primary association has been with the mail business, you couldn't really shift emphasis to streaming. With either stressing elasticity (making Netflix refer to both) or subbranding (Netflix by Mail, Netflix by Web), the mail service would be viewed as psychologically primary.
This wasn't a problem so long as streaming was a small part of the business. The brand has enough elasticity to cover both.
But now the Netflix town ain't big enough for the both of them. If you try to keep both under the same name, streaming would always seem like the plus-market service, even if it were to grow bigger than the mail part.
This is bad because the wrong expectations from the wrong users would have ended up guiding the business.
They recognized that with intense competition coming up in the streaming world, and the DVD market in decline, their best asset is their brand. The only way to reposition it in streaming properly is to publicly devalue and marginalize the old by mail business, and signal that the baby is now grown up and ready for the inheritance.
Perhaps they could have come up with a better name than Qwikster. My initial reaction was that they should have. But now I think that's ultimately useless. There is no way to dress up this move as anything other than what it is: a strong signal that the old business is being slowly put out to pasture and users who are there primarily for the mail service are now second-class citizens. Why bother investing in a more serious rebranding effort for the evicted occupant of the Netflix brand? Qwikster is a good enough name for a retirement home, for an aging parent shoved there by impatient kids waiting to inherit the nice house. Qwikster is Grandpa Simpson.
Repositioning is always painful. This is bold and necessary. I applaud the move. Few companies would have had the guts to play it by the book in such a stressful situation.
"Netflix" is a valuable brand. It fits streaming perfectly (Net - flicks). Yet, because its primary association has been with the mail business, you couldn't really shift emphasis to streaming. With either stressing elasticity (making Netflix refer to both) or subbranding (Netflix by Mail, Netflix by Web), the mail service would be viewed as psychologically primary.
This wasn't a problem so long as streaming was a small part of the business. The brand has enough elasticity to cover both.
But now the Netflix town ain't big enough for the both of them. If you try to keep both under the same name, streaming would always seem like the plus-market service, even if it were to grow bigger than the mail part.
This is bad because the wrong expectations from the wrong users would have ended up guiding the business.
They recognized that with intense competition coming up in the streaming world, and the DVD market in decline, their best asset is their brand. The only way to reposition it in streaming properly is to publicly devalue and marginalize the old by mail business, and signal that the baby is now grown up and ready for the inheritance.
Perhaps they could have come up with a better name than Qwikster. My initial reaction was that they should have. But now I think that's ultimately useless. There is no way to dress up this move as anything other than what it is: a strong signal that the old business is being slowly put out to pasture and users who are there primarily for the mail service are now second-class citizens. Why bother investing in a more serious rebranding effort for the evicted occupant of the Netflix brand? Qwikster is a good enough name for a retirement home, for an aging parent shoved there by impatient kids waiting to inherit the nice house. Qwikster is Grandpa Simpson.
Repositioning is always painful. This is bold and necessary. I applaud the move. Few companies would have had the guts to play it by the book in such a stressful situation.