Does Netflix Understand the Concept of Brand Equity

"Have you heard of Blockbuster?"
"Sure!"
"What about Netflix"?
"Yeah, of course!"
"How about Qwikster then?"
"..., what the hell is that?!"

You see, a while ago, Netflix's management somehow lost their mind and wanted to separate their Streaming and DVD business for some crazy reasons. In order to do so, they had to invent a new name for the DVD business, for which they decided to call "Qwikster".

Many marketers and companies well understand the concept and cherish the values of Brand Equity. "Brand equity is strategically crucial, but famously difficult to quantify", as says Wikipedia. Nevertheless, Brand Equity is important because the brand means "something" to the brand owner's customers. Companies spend millions of dollars to create brand awareness - it literally took too many years, since it was founded, for "Netflix" to become a well-known brand and replace "Blockbuster" in consumers' minds. Then, they decided to cut it in half and call one of the two pieces "Qwikster".

I got an email today from Netflix announcing that they decided to withdraw the "Qwikster" name and keep the same "Netflix" for both Streaming and DVD business. This is the right decision - but where the hell was Netflix's management BEFORE they decided to make the "Welcome Qwikster" announcement to the public? It looked to me as Netflix's board had no idea about Brand Equity - hey woke up one day and decided to toss it out.



Bottom line, it appears the Street didn't appreciate Netflix's "jerking around" as well. Netflix's stock is down 4.8% today, while ALL major U.S. stock indices had a fantastic run. A month ago, Netflix's stock was $203. It is traded at $111 today.



I'm canceling my Netflix account before their next billing period. I only have the streaming subscription, so my motivation of the cancellation is not because of the price jack. I don't think Netflix's streaming movies are as new and as widely-selectable as they claim. However, I do hope Netflix would keep their brand though, because "Qwikster" has no meaning in my mind, and I would not want to make a subscription with them should I decide to come back.