What is going on at Netflix?

Marketing professors across the U.S. must be chomping at the bit to discuss the self-inflicted damage Netflix has imposed on its brand in the last two months. To quickly recap, the popular DVD and streaming video service recently suffered swift consumer backlash this summer by changing its pricing plans. This morning, Netflix announced that it would be splitting its DVD-mailing service and streaming video service into two separate companies. Netflix’s streaming service will continue under the Netflix brand, while the DVD-by-mail service will be operated under the Qwikster brand.

To consumers, or this one at least, Netflix is a content provider. Whether via DVD-by-mail or through its streaming services, customers choose Netflix for its large video catalogue and reliable service. The strength in the DVD-by-mail service is its enormous catalogue of movies and television shows to serve the long-tail consumer demand, as well as its ability to deliver, generally, the “newest” DVDs on the market. Conversely, Netflix’s streaming service is popular due to its convenience and instant gratification. The streaming service, however, lacks the volume and access to the “newest” DVDs that the DVD-by-mail service offers.

In an email this morning from the Co-Founder and CEO of Netflix to subscribers, Reed Hastings apologized for Netflix’s poor handling of this summer’s price increases and also announced that the DVD-by-mail service would be formally split from Netflix and offered under the “Qwikster” brand. Netflix has again dropped the ball. Instead of one long email to communicate an apology and to announce a new venture, Netflix ought to have sent two separate messages weeks, or preferably months, apart. Instead, the two messages, which really serve distinct and unrelated purposes, were mashed into one long email. This seems disorganized and rushed.

As an attorney who works with start-up firms, I have advised clients to spend time on their brand development. While Netflix has secured the qwikster.com domain, there are some holes in its trademark and social media efforts. As of today, Netflix has yet to file a trademark application for its new Qwikster service. More troubling though is twitter. As @Mashable noted here: http://on.mash.to/neHqx0, the @Qwikster Twitter account is operated by a private individual who has chosen a marijuana-smoking Elmo as his account avatar. (Cue Sesame Street’s trademark lawyers). Personally, I am not a fan of the Qwikster name as it seems like a lame attempt to link the service to Napster and the fact that the DVD-by-mail service is not especially quick. In this article from Technologizer.com, it is clear that the Qwikster name is confusingly similar to a number of other firms such as Quixtar, QuickStar, Quickster, etc.

If there is one small winner from all of this, it is Blockbuster. Through advertising fees, the following tweet from @Blockbuster is the first result from a search of the the term “Qwikster” on Twitter: Well done.

At the end of the day, the decision to continue with Netflix or Qwikster will depend upon consumer’s perception of quality, speed, and variety of content.