In 2011 Netflix was the world\'s largest online movie rental service. Its subscr

Question

In 2011 Netflix was the world's largest online movie rental service. Its subscribers paid to have DVDs delivered to their homes through the U.S. mail, or to access and watch unlimited TV shows and movies streamed over the Internet to their TVs, mobile devices, or computers. On September 18, 2011 Netflix CEO and Co-Founder Reed Hastings announced on the Netflix blog that the company was splitting its DVD delivery service from its online streaming service, rebranding its DVD delivery service Qwikster as a way to differentiate it from its online streaming service, and creating a new website for it. Three weeks later, in response to customer outrage and confusion, Hastings rescinded the to rebrand the DVD delivery service Qwikster and re-integrating it into Netflix. Nevertheless, by October 24, 2011, only five weeks after the initial split, Netflix acknowledged that it had lost 800,000 US subscribers and expected to lose yet more, thanks both to the Qwikster debacle and the price hike the company had decided was necessary to cover increasing content costs.6 Despite this setback, Netflix continued to believe that by providing the cheapest and best subscription-paid, commercial-free streaming of movies and TV shows it could still rapidly and profitably fulfill its envisioned goal to become the world's best entertainment distribution platform. 1. Discuss the merits of the Rebranding Decision at Netflix. 2. Discuss Netflix's new pricing structure. 3. Discuss domestic/international online growth opportunities. 4. Discuss streaming vs. mail order distribution. 5. Discuss original content strategies. 6. Did Netflix underestimate the push-back from their price increase? (External Analysis) 7. Did Netflix underestimate the bad publicity from their new pricing structure? (External Analysis) 8. Did Netflix underestimate the number of subscription cancellations that resulted from their new pricing structure? (Internal Analysis) 9. Is Netflix actually correct in moving from mail order distribution to online streaming? (Internal Analysis) 10. Discussion of implications of the case for middle managers. (Internal Analysis) 11. Did Netflix implement too quickly? (Analysis of Strategic Factors) 12. Can Netflix compete with Amazon Prime? (Analysis of Strategic Factors)

Explanation / Answer

1.Merits and demerits of rebranding decision of Netflix
Rebranding helps to attract new customers and increase customer engagement with the new brand. It generates curiosity among the customers to try out different product offered by the brand. It helps to build the reputation of brand by offering additional features demanded by the customers.
The demerits would include loss of customers due to confusion related to different product offered by the brand. Rebranding also adds to the cost of management making the procedure of rebranding expensive.

2. The new pricing structure is framed to attract more number of customers who are always looking to save some money and gain good quality product. Here the Netflix is offering cheapest and best paid subscription and movies without advertisements which is a good deal for potential customers.

3. Due to online presence of the Netflix, it is help to gain customers from international market which adds to the growth opportunity of the company. Currently rising use of Smartphones and internet leaves huge scope for expansion and gaining massive profit.

4. Streaming vs mail order distribution main give rise to confusion among the customers leading to loss of subscriptions. Mail order is also expensive form of product then streaming online. There is no postage or shipping cost associated with streaming online which is a beneficial option. Netflix should develop its product completely around online streaming of videos rather than mail order distribution.

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