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Netflix Part 2: Strategy Reversal after Customer Outcry

Netflix Part 2: Strategy Reversal after Customer Outcry
The story of Netflix continues to evolve on a weekly basis. Today Netflix officially killed its extremely unpopular plan to spin off its DVD-by-mail service into a new service named Qwikster. This announcement was made via an email and blog post. In three short weeks the company has done a complete 180 degree reversal and now vows to continue using "one web site, one account and one password" under the Netflix brand for both streaming and DVD-by-mail services.

So how is the market responding? Netflix stock is up 2.25% so far today. The problem is that the whole market is in a huge rally with the Dow up 2.45%. So in other words, so far investors have said "ho-hum" to this announcement. Only time will tell how much of the lost sales and shareholder value Netflix will be able to recover. As previously reported, due to a slew of cancellations Netflix had to cut its third quarter guidance by 1 million customers.

All of this could probably have been avoided if only Netflix did some market research before drastically changing a wildly successful business model. Brings to mind an age old adage - "if it ain't broke, don't fix it."

posted @ Tuesday, October 11, 2011 by Chip Levinson

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About the Author

Chip Levinson, president of TechWise Research, Chip Levinson, president of TechWise Researchis a senior executive with over 22 years of experience in market research, business development, and product marketing. Throughout his accomplished career the combination of Chip's leadership skills with his commitment to excellence and customer service has helped employers and clients alike become more successful in their marketing endeavors. He has three main areas of expertise:

  • Market Research – Chip has personally designed, managed and analyzed hundreds of custom market research studies regarding computer hardware, software, and other high-tech products.
     
  • Product Marketing – Chip has managed the development and marketing of numerous successful software products, including market simulation tools, web survey software, XML editors, and printer driver software.
     
  • Business Development - Chip has a track record of implementing successful programs targeted at consumers, businesses, resellers, and OEMs.

Chip holds a Bachelor of Science degree in Engineering from the University of Michigan and an MBA in Marketing and Finance from UCLA.To learn more about Chip, visit his Linked In Profile.

 


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