Netflix Case Study

In a move that almost destroyed the company Netflix suffered a blow when in September of 2011 they tried to divide their business into two divisions. They created one division for DVD’s, Qwikster, and another for streaming videos. Along with this split in the company there would also be an increase in monthly fees. Once the plan was announced Netflix lost over 805,000 subscribers and the stock dropped by more than 50%. Hastings, the founder and chief executive officer of Netflix, believed that DVD rentals will begin to decline and the wave of the future is streaming videos. It made perfect sense to him to divide the business and slowly move towards streaming rather than DVD rentals. With the loss in revenue, customer loyalty, and subscriptions Netflix had to take a look at how to fix the mess and keep customers satisfied. In an article by Larry Dignan from zdnet Netflix stated “they value their customers and didn’t want to lose more subscriptions”. Looking at Hastings newest business model it was decided that the launch of Qwikster was a major wrinkle in the business and now Netflix brand was tarnished. Something needed to be done to bring back customer loyalty and to address the loss of value in the brand Netflix. In order to make certain that Netflix will achieve strength by preserving customer satisfaction and loyalty, Netflix must review and put into place alternative resolutions. There are a few suggestions to help Netflix overcome this debacle. The first would be to target all age customers through marketing, current trends are geared toward the younger generation, add sports or other news media for streaming, expand internationally and add commercials to the streaming. Netflix is not a small provider of entertainment. As of 2009 they had over 10 million subscribers from all over the world. By 2011 they had grown to 26 million worldwide. Netflix had a great opportunity for many years and was able to surpass all other competitors.