There are a lot of lessons we can learn from this:
- It was smart for Netflix to look at their streaming and DVD business differently and treat them as to different operating models. Running them operationally as separate businesses was necessary. – Having a separate pricing model for both was inevitable. Bandwidth and streaming content isn’t free. This separate pricing was inevitable. They could have survived the poor roll-out over time; we can all theorize how to best communicate a price hike.
- It was a huge mistake was to imagine that the splitting of the businesses operationally and from a revenue perspective required two totally separate businesses under different names. A large part of Netflix’s value is their brand; in one stupid move the value of that goodwill plummeted. They were willing to toss aside the goodwill of the Netflix brand very casually. If you have built a great name, leverage it, don’t toss it. Even laundry soap companies know that.
- No one seemed to care a bit about the customer and their ratings, queues, and ease of use. This was inexcusable. Even companies as backward and clumsy as AT&T have figure out how to give you a single bill.
Assuming that these types of strategic decision require some board approval; one wonders where all the “smart” people were.
As for disrupting their own business, they did that when they introduced streaming and got wide adoption. They were willing to cannibalize their “cash cow” to stay competitive. That was important. Splitting the user experience and rebranding was disruptive, but not in the good way.
My question is, did they resuscitate the Blockbuster brand from near death?