Netflix Fumbles Its Rebranding Strategy

The price increase was just the beginning of the Netflix rebranding strategy, a strategy that they have not only fumbled, but let the other team return for a touchdown. Let’s look past the fact that Netflix lost over 1 million subscribers after its price increase in August/September. Let’s also look past the fact that the company has lost half of its market value since July. Instead, let’s focus in on the companies reasons for tweaking its business model, and its rebranding marketing strategy, or lack-there-of.

 

Rebranding a Giant

When it comes to transitioning a brand giant such as Netflix, there must be a well researched, well thought-out, well planned strategy that includes segmented strategies for all possible scenarios. Netflix not only increased prices a few months back, but they have split their brand into two separate categories, with two separate websites, two separate customer bases, and two separate billing avenues for those customers. The brand that was once about affordability, instant access and usability has, in effect, told customers that they must go to two separate websites to do what they were once doing on just one site. They have taken their brand from simple to complicated, the worst rebranding that can be done.

 

Rebranding that works is rebranding that takes the complicated and simplifies it. The Starbucks logo was never complicated, per say, but it did become simpler when it was rebranded. When Apple took that old, very colorful logo and transformed it into an updated, sleek and sophisticated apple it simplified things. Intel was once “Intel Inside” before it dropped the “Inside.” Lego took it’s many categories (Technic, Duplo, Primo) and transformed them into “Explore,” “Make & Create,” and “Stories & Action.”

 

Netflix not only split its brand into two identities, it gave one of those identities and entirely new name; Qwikster, not to be confused with Quickster, a sports network, Quixtar, an internet division of Amway, or Kwik Star, a chain of convenience stores. Qwikster is the new brand for Netflix DVD-mail rentals, and a whole new set of rules that customers must learn about.

 

Rebranding, in the case of Netflix, was to advance the companies status in the world of streaming video rentals. As BusinessWeek.com points out, by the end of September, Netflix figures less than 10 percent of its expected 24 million customers in the U.S. will subscribe to DVD-only plans. From a CEO’s perspective, continuing to lose money on DVD rentals is a poor choice. Taking the perspective of a business that needs to increase profits, it’s a smart move.

 

From a brand marketing perspective, Netflix has dropped the ball. Rebranding should be part of an overall brand strategy that includes a prolonged adherence to increasing brand equity, cultivating relationships with brand advocates, and ultimately increasing profits. Instead, Netflix made numerous changes without warning, and then made a public apology for those changes.

 

It’s for that reason that Netflix has lost 53 percent of its market value, turning the rebranding strategy into a PR damage control nightmare.