One year ago, Netflix was being heralded as the forerunner of the ongoing transition of media ingestion from traditional media to online media. Today, Netflix, it’s offspring Qwikster, and their CEO are eating humble pie.
“Sho, you want watch a movie. Well, here’sh how you do it…”
— Sean Connery in The Touchables
Okay, no such movie exists but if someone like, say, David Fincher made a movie about the rise and wobbly pratfalls of Netflix, he should cast Connery as the Mr. Wilson of the tale. Or, on second thought, maybe there is no Mr. Wilson in this story which would explain why the anointed-to-be-mammoth Neflix continues to make blunders so great that even their massive subscribership can’t help their stock from falling. And that last bit is not metaphor.
Here’s the skinny:
Netflix sprang up along with services like Red Box and offerings like Hulu and tried to make a play for consumers of new media. New media which was once a buzz phrase to signify the mishmash haute techno-couture of things like streaming media and all which was the whizbang of internetry of the day. Now that ‘new media’ is really de rigueur, the phrase is now as outmoded as ‘de rigueur’ and ‘outmoded’. In any event, Netflix combined the streaming goodness of a paid service like Hulu and the tactile pleasures of trafficking in actual DVDs like Red Box. They did it successfully enough to garner the subscriptions of the masses.
And, roughly one year ago, they were crowned by many observers as the reigning champion of home delivery visual media. Statistics were bandied about which said that Netflix accounted for half of the streaming traffic on the internet. YouTube scoffed at the notion and fixed Netflix with a disapproving stare. The porn industry laughed at them both. But even Mark Zuckerberg took note and at the beginning of this summer, poached some personnel for his own cabal by putting Reed Hastings at the Big Boys Table.
In any event, the non-X-rated technophiliac cabals of punditry declared Netflix the new giant kid on the block and their IPO rose in a fashion which would have made Icarus jealous. They went public in 2002 and sold at ~$15/share and this year they have been bought and sold like a Wayne Gretzky rookie card at anywhere between $200-$300 a share. However, somewhere along the way, they made The Decision. And it was one which would have had Daedalus looking on with rueful acknowledgment.
On September 18, in a blog post which has achieved levels of infamy even Invader Zim would envy, Mr. Hastings himself explained that Netflix’s streaming and DVD services will divorce each other. And I do mean divorce. The DVD service will be rebranded as Qwikster (and drop their married name). It will have its own highfalutin site, its own management, and its own customer relations. It’s a spin-off series to the hit Netflix show. And this Icarusian decision has been much ballyhooed by the company and similarly booed by the customer base and many observers.
Now, business model analysis aside, I’m just going to address the branding and customer experience side of things. In a critical analysis of this particular branding manoeuvre, when taking into account the various experiential factors which can surmised from the interpolated effects and compounded with ascribed theoretical ramifications of its clientele’s collective psychological reactions, it can be safely assumed that the most-likely co-responsive outcome is: Suckster, The Sucktastic New Netflix Company.
(Sucktastic is a technical term.)
Someone at Yahoo! Finance seems to think that Qwikster will prove to be a brand move that is as successful as the iPod, and not a failure like New Coke. Yes, that’s right, someone at Yahoo! is offering brand management advice. So, moving on…
As far as branding goes, the Netflix team is just smoking bad pot, as far as I’m concerned. Qwikster? Could you pick a name that’s further from the original brand? Okay, sure, it’s similarly a one-word brand name, it has the same number of syllables (although the actual oratory cadence is imprecise), and it shares three letters (e, t, and i). Other than that, it bears no resemblance to Netflix and, worse still, it’s a muddled choice because there are several other spellings of the same homonym and similar sounding offerings already out there. Heck, I’ve been reading about this for days now and I keep have to double-checking my spelling in this article. I half expect to see some option for liquid chocolate mix somewhere in the fine print.
And, here’s the kicker. Even Reed Hastings isn’t all too impressed with the new name and logo. In his widely-panned blog post, Mr. Neflix himself said:
“The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you.”
What?! You’re the bloody founder and CEO and you’re still waiting for the Qwikster brand name and logo to grow on you? Then why is it even out there in the first place? The basics of branding tell us that a brand name and logo should strike some balance between making the point of what service or product(s) the customer can expect (What We Do) and evoke the sensibilities of the company (How We Do It).
This is what you’ve come up with?
…branding which you still need time for it to “grow on” you? $200-$300 a share and you’ve managed to make Facebook’s standards and practices when it comes to changes look warm and fuzzy. And competent. Also, for the record, the “A Netflix Company” bittie just makes you look like you’re trying too hard and, quite frankly, pretentious.
HANLON, HEINLEIN, AND THE SHORT GUY WITH A FUNNY HAT
As for the intended customer experience, it’s no better.
Here’s the thing, see. I like Netflix. I’m a subscriber. Now, I didn’t use the DVD delivery service at all but I know, had been a user of that service I would not be happy to hear that I need to sign up for a new service (Qwikster), enter in new data, and once again enter in all my movie ratings and preferences so that the semi-intuitive system continues to recommend material which I would want to view. You see, despite all the work and effort they put into this Qwikster enterprise, someone decided they would not make available an integrated option between that site and the Netflix site.
Even Microsoft Outlook, long considered the red-headed stepchild of email for its once-upon-a-time obstinate lack of integration, now allows you to do things like import contacts from other email clients. Hell, the whole social media ‘revolution’ has engendered a state of affairs whereby various platforms, services, APIs, et al, can ‘talk’ to each other and exchange information at the user’s discretion. And yet, here we have two companies offering the exact same service (film and television entertainment) with the exception of the medium, sprung from the same set of Netflixian loins which have decided, despite their billions of dollars of revenue, to NOT allow the integration of the two faces of Reed Hastings — on purpose, by design, and utterly intentional.
Netflix/Qwikster, I get that you want to market and manage the DVD and streaming services separately and under different business models. However, like a bad divorce causes the children to suffer, you’ve decide to make things horrid for your dual customers.
“If you want to spend time with Mommy, you’ve got to go to her house but you can’t take any of your things with you — you can only use the things Mommy bought you and nothing that Daddy bought you. But, don’t worry, we’re still a family. I love you!”
I’m not sure if some of the speculation about the motives of Reed Hastings are true — like the notion that he’s intentionally gutting to the company’s profitability to line his pockets in a way even the Gordon Gekkos of Broadway-to-South consider avariciously voracious — because I’m inclined to believe anyone who publicly publishes such a self-damaging post is either incompetent or just plain flying over the cuckoo’s nest. Bonjour, Heinlein’s Razor (screw Hanlon).
FROM THE HORSE’S MOUTH
Here, you be the judge. Do these guys seem like they can even figure out their own smart phones much less a billion-dollar company?:
As of this article, the video itself has 687 likes and 4,418 dislikes. Now even in the wonderful world of internet crankery that’s a very telling ratio of satisfied to dissatisfied customers. This, by the way, is how Bill Gates and Steve Jobs ruined major media business. Every CEO and their dog (I’m looking at you, Zuckerberg) wants to be the face of their tech-media empire. Well, that’s great. Unfortunately, sometimes you are doing far more damage than you know and it’s up to your advisors to speak up and tell you so.
Gates and Jobs are supernerds and visionaries. In the world of nerddom, Bill Gates’ pasty geekery was a bonus. We wanted the guy with big brain and vitamin D deficiency to be running the show. In the world of gadgetry, Steve Jobs’ reach-for-the-stars, undaunted boyishness was also a bonus. We wanted the pipe-dream dork with a proven track record to show us what zany new toy he’d thought-up. Mr. Hastings, your name may end in an S but you, sir, are no Mr. Gates and certainly no Mr. Jobs. And personal mea culpae are best left to politicians, not CEOs.
As a girlfriend once told me — well, more than once, unfortunately — the best apology is to not get it wrong the next time because, eventually, “Sorry” is not enough.
From my perspective, though, you’ll be ripe for another apology sooner than you think. I doubt this will kill Netflix/Qwikster as some have suggested. Sure, it’s already cost a loss of subscribers, a flurry of condemnation, and even a dip in your once invulnerable stock prices but big changes to major brand often cause all of these things. In all likelihood, the storm will be weathered and the kerfuffle will eventually become a distant memory.
However, for now, that successful image Netflix enjoyed for its first decade will now remain tarnished for a good long while and it will likely stunt growth in the near future. However, I attribute this not to malice (nor greed, which is rote in big business anyway) but to a severe amount of stupidity and hubris. Even the issued apology is filled with a passive arrogance.
At least, for a good long while, the Qwikster fiasco will serve as fodder for a generation of design and branding students to study. Of course, the overriding topic of discussion is likely to be, “What went wrong?” For starters, let me suggest: Launching a new brand along with an apology is like trying to get a second date by phoning the girl and starting with, “I’m sorry about how things ended the other night.”
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- Jessica E. Vascellaro, Lauren A. E. Schuker, Sam Schechner, A Changed Tune on Netflix, Wall Street Journal, 9 May 2011
- Leena Rao, Readying For An IPO, Facebook Adds Netflix Founder And CEO Reed Hastings To Board, TechCrunch, 23 June 2011
- Ian Sherr, New Netflix Pricing Get Thumbs Downs, Wall Street Journal, 16 September 2011
- author unknown, Netflix IPO Easily One of the Last Decade’s Best, Stock Rock and Roll, 19 September 2011
- Ethan Smith, Netflix Separates DVD and Streaming Services, Wall Street Journal, 19 September 2011
- Daryl Lang, Enter Qwikster, The Brand Designed To Fail, Breaking Copy, 19 September 2011
- TheWrap, Wall Street Sounds Off On Streaming Service CEO, Reuters, 22 September 2011