We didn’t plan on writing about Netflix again, after our post three days ago. But loyal Lairig Marketing reader Denis wrote, curious about the naming decision Netflix made. “Why not just call them Netflix Streaming and Netflix DVD?” Denis asked.
Excellent question. And not one you will see addressed anywhere else. The articles are already stacking up about the “PR debacle,” criticizing CEO Reed Hastings’s public apology. A much bigger issue is what the new brand-naming convention means to Netflix’s future. So, bravo to Denis for asking.
Netflix would have done what Denis suggested if it had wanted to create a strong “branded house,” like our friends at Virgin. But Hastings’s letter is clear, almost strident, in stating the company sees no synergies at all between a DVD business and a streaming one: “that need to be marketed differently, and we need to let each grow and operate independently.”
The die was already cast, then, for an act of brand suicide. The business (not brand) names doled out were just additional blocks of concrete tied around the legs, to ensure drowning.
The logic to call streaming “Netflix” makes sense from a business perspective. But not from a marketing one. Now, 20-million-plus subscribers need to be re-educated about TWO brands, versus one. Hundreds of thousands of customer service hours squandered, needlessly. So much for being worried about “cost structure.”
But there can only be one reason to take “Netflix” away from the DVD business and give it a name that three monkeys and one typewriter could have outdone, a name illogical since streaming is “Qwikster” than the post office: the DVD business is going to be spun off or sold off.
Hastings and team were able to cut the Netflix stock price in half. With this branding decision, they’ve outdone themselves, cutting the business to ribbons.