netflix and qwikster case study solution

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

A Split Decision: The Critical Analysis of Netflix’s Communication Strategy during the Development of Qwikster

Related Papers

Lecturer David Robinson prepared this case study with Max Oltersdorfas the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. This case represents a fictional portrayal of a public figure based on published sources. It is written for educational purposes and classroom discussion.

Aaron linox

Philip Napoli

This article revisits the long tail phenomenon, a dozen years after it was first articulated as a model for the digital media economy. As this article illustrates, both the research evidence and the evolution of industry practice have demonstrated that the long tail phenomenon has failed to take hold to the extent expected. This article outlines the interconnected technological, institutional and economic factors that explain the decline of the long tail, and considers the implications of this decline for media policy and media research.

Gustavo Camacho

Caso práctico sobre administración estratégica

Benjamin Burroughs

This article focuses on the emergence of a nascent streaming industry. The media industry studies conceptualization of “industry lore” can be read during times of transition for media industries. Streaming lore is a re-articulation of existing industry lore accompanying the advent of streaming technology and distribution. Contemporary streaming acts as a site of rupture, wherein industry discourses related to digital media are rendered visible. The article proposes three categories of emergent streaming lore and analyzes their relation to a growing streaming media industry. These categories include (a) Netflix as “quality” streams, (b) the algorithmic audience, and (c) cord-cutters and cord-nevers.

Hồng Phúc Hoàng

Veronica Michelin

Tenendo un approccio in parte storiografico, e in parte di analisi industriale, l’obbiettivo che questo testo si prefigge è quello di, da una parte, rendere evidenti quelli che sono stati i motivi che hanno reso Netflix un’impresa di successo contro ogni previsione, dall'altra come questi motivi la rendano diversa da qualsiasi altro progetto simile che si è lanciato (o è in procinto di farlo) in questo specifico tipo di mercato.

Media, Culture & Society

Michael L Wayne

Branding has been described as the defining industrial practice of television's recent past. This article examines publicly available industry documents, trade press coverage, and executive interviews to understand the place of traditional television network branding in streaming video on-demand (SVOD) portals as represented by Amazon and Netflix. Focusing on materials relating to licensed rather than original content and the role of such content within the U.S. domestic SVOD market, two distinct approaches emerge. For Amazon, the brand identities of some television networks act as valuable lures that draw customers into its Prime membership program. For Netflix, linear television networks are competitors and their brand identities are seen as impediments that reduce Netflix's own brand equity. Nonetheless, for advertiser-supported cable networks, the benefits of network branded content on SVODs remains unclear. Ultimately, Amazon's efforts to build a streaming service alongside network brand identities and Netflix's efforts to build its own brand at the expense of such identities demonstrates the need to think about contemporary television branding as an ongoing negotiation between established and emerging practices.

Mike Van Esler

Television as a medium is in transition. From DVRs, to Netflix, to HBO Now, consumers have never before had such control over how they consume televisual content. The rapid changes to the medium have led to rhetoric heralding the impending " post-TV era. " Looking at the ways that legacy television companies have adapted to new technologies and cultural practices suggests that rather than traditional television going the way of radio, television as a medium is actually not terribly different, at least not enough to conclude that we have entered a new era. Press releases, discursive practices by the news media, corporate structures and investments, and audience research all point to the rhetoric of post-TV as being overblown. By thinking about contemporary television as being in transition, greater emphasis and attention can be placed on the role that major media conglomerates play in developing, funding, and legitimizing new forms of television distribution, in addition to co-opting disruptive technologies and business models while hindering others.

Domenico Bondì

Loading Preview

Sorry, preview is currently unavailable. You can download the paper by clicking the button above.

RELATED PAPERS

Lucas Garces

III Congreso Internacional Asociación Española de Investigación en Comunicación.

Jessica Izquierdo-Castillo

Perihan AbouZeid

Salicious Crumb

Journal of the International Academy of Case Studies

TODD A FINKLE

Revista Communicare

Dirceu Lemos da Silva

Cristian Sepulveda

Oscar Calibre

The Journal of Media Innovations

Charles Davis , Emilia King

Patrick Vonderau

Luis Contreras

Maíra Bianchini

Terje Colbjørnsen

Anderson Lopes da Silva

Ted Striphas , Blake Hallinan

Luana Galarza

Université Paul Valéry-Montpellier III Mini-Mémoire Du Master 1 En Études Culturelles

José Octavio Islas Carmona

Alonso Pérez Fragua

Strategy & Leadership

Jorge Rufat-Latre

RELATED TOPICS

•   We're Hiring!
•   Help Center
• Find new research papers in:
• Health Sciences
• Earth Sciences
• Cognitive Science
• Mathematics
• Computer Science
• Academia ©2024

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

Netflix’s Bold Disruptive Innovation

• Adam Richardson

Every now and then, the business world presents us with a lab experiment that we can observe in realtime. Netflix’s announcement that it is splitting off its DVD-by-mail business from its streaming business is just such an experiment. The DVD business will now go by the name Qwikster, and the streaming business will stay under […]

Every now and then, the business world presents us with a lab experiment that we can observe in realtime. Netflix’s announcement that it is splitting off its DVD-by-mail business from its streaming business is just such an experiment. The DVD business will now go by the name Qwikster, and the streaming business will stay under the Netflix brand. It is Clayton Christensen ‘s innovator’s dilemma incarnate, and Netflix is very publicly trying to solve it. Like its 60% price increase did earlier this year, this move is understandably causing consternation amongst some customers. It’s a bold move, one that will cost them in the near term, but Netflix I’m sure has done the calculus and is looking at the endgame 5-10 years out, not 5-10 months.

• Adam Richardson is a creative director at the global innovation firm frog design and the author of Innovation X: Why a Company’s Toughest Problems Are Its Greatest Advantage . His background combines experience in product development, product strategy, and customer research.

Partner Center

• The Inventory

As Netflix turns 20, let’s revisit its biggest blunder

We all have those moments we’d rather forget. Let’s revisit one of Netflix’s on the 20th anniversary of its launch.

The streaming-video behemoth, which upended nearly every aspect of the movie and TV businesses over its two-decade history, may seem unstoppable now. But in 2011, its ambitions nearly spelled its demise.

The online-video service, which started out renting DVDs by mail, was three years into experimenting with on-demand streaming and CEO Reed Hastings knew it was the future. With streaming video, Netflix could bring movies and TV to the world, as it started to do in 2010 in Canada , the first country Netflix entered outside the US. (Today, it is nearly everywhere in the world .) However, Hastings ran before he could walk when he abruptly announced in July 2011, against better counsel  (paywall), that Netflix would splinter its DVD and streaming subscriptions.

Instead of paying $10 a month for DVD rentals and unlimited on-demand streaming, customers who wanted both services would have to pay for two different packages, each starting at $7.99, or $15.98 for the pair. “With this change, Netflix will no longer be offering unlimited plans that include both streaming and DVDs by mail,” Netflix unceremoniously announced in a release  on July 12.

At first, the stock rose to an all-time closing high of $42.68, with investors drawn to the additional revenue per subscriber the move might produce. The stock wouldn’t reach that level again for more than two years. Subscribers swiftly expressed their displeasure about having the DVD rentals that attracted them to Netflix removed from the convenience of on-demand streaming. The dual plans effectively amounted to a 60% price hike.

After two months, during which Netflix’s stock lost half its value, Hastings addressed the issue in a blog post that apologized for the way the strategy was announced—and then doubled down on the plans. The Sept. 18 post began:

I messed up. I owe everyone an explanation. It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology.

It went on to say that the DVD service would soon be called Qwikster.

We realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to “Qwikster”.

The site’s login credentials, billing, ratings and reviews would not be integrated into the streaming service’s, the release added. So if a customer with both services needed to change their billing or contact information, they’d need to do so in two places. And their ratings and reviews on Qwikster would not show up on Netflix, and vice-versa.

The move did nothing to calm customers and Netflix cancelled plans for the service less than a month later, while leaving the DVD and streaming plans separate. “There is a difference between moving quickly—which Netflix has done very well for years—and moving too fast, which is what we did in this case,” Hastings said in a statement. The whole ordeal cost the company about 800,000 US subscribers in the third quarter of 2011 , its first decline in years. For years afterward, planned rate increases made investors skittish.

Netflix ultimately learned from this youthful blunder and got smarter about the way it hikes prices . Last time it raised rates in the US, it signed up more new subscribers than ever,  because the increase was modest and imposed during a quarter that also included the return of some of its hottest shows such as The Crown, Stranger Things,  and  Black Mirror,  and new releases like  Bright  and  Mindhunter.  It now has 117 million streaming subscribers worldwide, up from the 24 million or so total members it closed out the third quarter of 2011 with. The DVD business lives on, with about 3.4 million subscribers at last count.

📬 Sign up for the Daily Brief

Our free, fast, and fun briefing on the global economy, delivered every weekday morning.

MIT Technology Review

• Newsletters

Netflix’s Qwikster Debacle

• David Zax archive page

As you’ve no doubt heard, Netflix has now pivoted on the pivot of its recent pivot. A few months ago, it announced that it would be separating the cost of its DVD-by-mail and its streaming plans, creating an effective price hike for those who had taken advantage of the company’s bargain bundle subscription. Outrage ensued. Then, a few weeks ago, CEO Reed Hastings emailed subscribers again to announce another change: Netflix would be separating its DVD and streaming services entirely, redubbing the former “Qwikster” and assigning it a separate, albeit linked, website. More outrage ensued. And just yesterday, Netflix announced a change to the change: the customers had spoken; Qwikster was a bad idea; the plan to divide services would be scrapped. Murmurs of confusion and disbelief ensued.

All in all, it has been highly erratic and ill-planned behavior for a star of the Web 2.0 era. What is going on in Hastings mind?

Each of Netflix’s business decisions may well have been sound. A price hike associated with the DVD-by-mail services seemed inevitable–mailing costs were simply too high. Indeed, with the majority of Netflix’s new customers signing up for streaming-only plans, and with streaming an increasingly powerful force from Hulu and Amazon, it’s clear that the real future of the business is in the cloud, not in the optical disk, and Netflix is right to focus on battles on that front.

Even so, Hastings didn’t need to say so. The main problem with Netflix’s recent moves has been less the business case for them (many analysts agree that the price hike, in particular, was necessary). Rather, the main problem was Netflix’s handling of the changes–the garbled emails sent by Hastings, the poor timing, and the overall sense of indecision hanging over the whole affair.

Here are a few things Neflix might have done differently, in retrospect. First of all, it should have continued to offer some sort of reward to existing customers who had signed up for a bundled streaming-plus-DVD option. As one of those customers myself, I felt irritated that my earlier decision to spend an extra $2 for DVDs was not honored or rewarded in any way; even if I had been informed that existing bundlers were being given a mere $1 discount over new subscribers, I would have felt my early loyalty to Netflix was being honored.

Second, if Netflix was set on both raising prices and separating its two services, it ought to have made those announcements simultaneously. The steady pulse of one weird, sweeping change after another was too much to bear; it was only after the Qwikster announcement that I personally decided to cancel my DVD subscription.

Third, and most importantly, someone could have actually edited Reed Hasting’s emails and blog posts. Indeed, Neflix’s entire PR strategy ought to have been more thoroughly thought out from the beginning.

There are so many communications missteps that they are difficult to list. Netflix underestimated the iconic appeal of the traditional red envelope with its familiar name affixed to it; even if DVDs constituted the withering branch of Netflix’s business, it needed to be properly honored as the artifact that started it all. The name “Qwikster” could have been given more than a modicum of thought; so silly is it–instant streaming is a whole lot “qwikker” than the US Postal Service, after all–that I nearly checked my calendar to make sure it wasn’t April 1st. (The corresponding Twitter handle appears to belong to some kind of stoner .) Hastings should have also realized that an email that began “ I messed up ” would be expected to contain some sort of apology or reward–perhaps those price changes would be revoked after all!–rather than a new form of punishment and source of irritation. Stepping on someone’s toe repeatedly while saying “I’m sorry” is an apology in name only.

Finally, Hastings ought to have realized that while the ins and outs of the business case for Netflix’s maneuvers are interesting to tech bloggers and business analysts, they are not so to Netflix’s average consumer–to the vast majority of the recipients of those emails. Each of Hastings’s communications suffers from a severe case of TMI, alternating from melodrama to dry business speak. At one point he’s speaking of his “greatest fears”; moments later he’s talking about how DVDs and streaming have “very different cost structures,” as though he were delivering a report on quarterly earnings (or losses–Netflix shares have plummeted precipitously since July). Hastings’s messages have been part Woody Allenish neurosis, part dry economics documentary–and just about everyone in the audience has felt the impulse to walk out.

Keep Reading

Most popular.

How to fix a Windows PC affected by the global outage

There is a known workaround for the blue screen CrowdStrike error that many Windows computers are currently experiencing. Here’s how to do it.

• Rhiannon Williams archive page

A controversial Chinese CRISPR scientist is still hopeful about embryo gene editing. Here’s why.

He Jiankui, who went to prison for three years for making the world’s first gene-edited babies, talked to MIT Technology Review about his new research plans.

• Zeyi Yang archive page

Google DeepMind’s new AI systems can now solve complex math problems

AlphaProof and AlphaGeometry 2 are steps toward building systems that can reason, which could unlock exciting new capabilities.

OpenAI has released a new ChatGPT bot that you can talk to

The voice-enabled chatbot will be available to a small group of people today, and to all ChatGPT Plus users in the fall. 

• Melissa Heikkilä archive page

Stay connected

Get the latest updates from mit technology review.

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at [email protected] with a list of newsletters you’d like to receive.

Find anything you save across the site in your account

Netflix and Qwikster: The Streaming Apology

First, a confession: I’m not the world’s heaviest user of Netflix—in fact, I just now borrowed my first DVD from them. That’s because I live near one of the last of the great video stores, The Video Room , which has—well, not everything; who does? But they have an extraordinary collection of both DVDs and VHS tapes, and can deliver them to me the same day. (Or I can just pick them up; it’s good to talk movies with the passionate and knowledgeable staff members, led by the consummate cinephile manager and buyer, Howard Salen.)

On the other hand, for instantaneous delivery, nothing beats streaming video. That’s where Netflix has grown most dramatically in recent years, and that’s where the company stubbed its toe, several weeks ago, when it separated its DVD and streaming services and began charging separately (with a baseline of $7.99 for each in lieu of $9.99 for both), resulting in a sixty-per-cent price increase for customers who merely wanted to keep their service unchanged. Patrick Kevin Day, in The Hollywood Reporter , wrote,

A survey in July of nearly 1100 Netflix users by Wedbush Securities found that 22 percent planned to cancel their Netflix subscriptions and migrate to Hulu, Redbox and Amazon’s streaming video service.

Netflix’s stock has since dropped nearly fifty per cent , and their growth forecasts have shrunk. This morning, the company’s C.E.O., Reed Hastings, sent an e-mail to Netflix subscribers apologizing for the lack of “respect and humility” in the way the pricing changes were communicated, and announcing a new set of changes: the firm’s DVD unit is being spun off into a new company, Qwikster, to be run by the head of Netflix’s DVD division, Andy Rendich. Netflix itself will now be a streaming-only company.

Meanwhile, the Starz network, which controls pay-cable rights to movies by Sony and Disney, has decided not to renew its contract with Netflix for streaming video (the idea being that Starz itself would hope to add subscribers who want their movies); and, as Ben Fritz at the L. A. Times reports, “HBO, which has offerings from 20th Century Fox, Universal Pictures and Warner Bros., has refused to partner with Netflix.”

Netflix took a big bite out of the video-store business because it didn’t depend on bricks and mortar (or, at least, a lot less of it than the local store); it has been the Amazon of the video-rental business. But, like Amazon, it still has a huge backroom operation, for buying, shipping, and receiving, that has given it an advantage over other video-by-mail services in its scale and efficiency. The streaming business has even lower overhead—any company that owns rights to movies can set up streaming-video service, and it certainly wouldn’t be prohibitive for any major studio or its affiliate to launch one with their own product.

It seems plausible that Netflix, in its new, streaming-only version, will have less and less access to major-label movies and may well become mainly a clearinghouse for work that isn’t put out by a distributor large enough to invest in its own streaming service—in effect, solely an arthouse or cinephile operation. And that wouldn’t be a bad thing at all. But such a company wouldn’t be the overall industry-dominating standard for streaming, as it so recently seemed poised to become.

In a video message (above), Hastings says, “Over time, both DVD and streaming will be much better because they’re separate.” And that may be true, but his customers aren’t expecting to watch videos over time, but today—and today, they’re paying more, for what will soon be less. And I suspect that this trend will only accelerate.

Netflix's Qwikster debacle: Can the damage be undone?

After just three weeks, the company puts the kibosh on a much-loathed plan to separate its streaming and DVD-by-mail services

• Newsletter sign up Newsletter

Netflix, the once beloved DVD-by-mail and video-streaming service, has been messing with its strategy — and customers' minds. In July, Netflix raised the price on its popular DVD-and-streaming combo plan by 60 percent, inciting subscriber rage. Then last month, in another unpopular move, Netflix announced it was splitting into two different companies, creating a new business called Qwikster to manage its DVD-by-mail offerings. Now, just three weeks later, the company has backtracked on the controversial Qwikster split, presumably in response to customer outcry. Will America forgive Netflix for its recent missteps?

Netflix will be fine if it wises up: Chief executive Reed Hastings has a rep for being "one of the tech sector's most consumer-friendly CEOs," says Greg Sandoval at CNET. He's built up a lot of customer goodwill over the years by freeing customers from video store lines and late fees, and customers will likely forgive Netflix's transgressions if the company stabilizes and puts this strange summer behind it. Netflix needs to make two things a priority: Adding more titles to its streaming service to make up for the price hike, and "not generating any more headlines."

"Netflix cancels Qwikster spinoff"

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Netflix's image (and bottom line) may feel this sting: Netflix's abrupt about-face is a little hard to reconcile with the glowing aura — "super smart, able to see around corners, not afraid to run against the herd" — that used to surround the company, says Peter Kafka at All Things D . This stark reversal suggests that the Qwikster backlash was costing Netflix even more customers. We'll see when the company's Q3 subscriber numbers are released Oct. 24. Regardless, the price hike is still in place — and customers, and Wall Street, still aren't happy about it.

"Qwikster is gonester: Netflix kills its DVD-only business before launch"

And it might be too late to recover: "Has the damage already been done?" asks Ryan Lawler at GigaOm . Maybe. Competitors like Amazon Prime, Dish Network, and Blockbuster Movie Pass are looking for any opening to steal Netflix's customers. Those services have been improving their offerings, and fed-up Netflix customers may turn to them as an alternative... if they haven't already.

"Netflix kills Qwikster, backtracks on DVD spinoff"

Sign up for Today's Best Articles in your inbox

A free daily email with the biggest news stories of the day – and the best features from TheWeek.com

Cartoons Saturday's cartoons - a second debate, Europe on the menu, and more

By The Week US Published 14 September 24

Cartoons Artists take on a deepfake debate, winners and losers, and more

Talking Point This case is unusually horrifying, but the misogyny that enabled is chillingly common

By The Week UK Published 14 September 24

• Contact Future's experts
• Terms and Conditions
• Privacy Policy
• Cookie Policy
• Advertise With Us

The Week is part of Future plc, an international media group and leading digital publisher. Visit our corporate site . © Future US, Inc. Full 7th Floor, 130 West 42nd Street, New York, NY 10036.

30+ years in business.

(534 reviews).

• February 22, 2024

Netflix-Qwikster Fiasco Shows Importance of Clear Communication

Table of contents.

In 2011, Netflix made one of the biggest marketing faux pas of all time: it attempted to split its DVD-by-mail service and DVD streaming service into two different companies, calling the streaming service Qwikster. The split was complicated, confusing and lacked  clear communication.

The split was supposed to make streaming DVDs easier and enable Netflix to focus more of its resources on obtaining streaming content since the DVD rental option was beginning to taper off in popularity. It was supposed to be more convenient for users, but the entire concept of Qwikster was anything but.

Before the whole fiasco, Netflix had a $16 billion market value and 12 million happy customers with joint streaming/DVD-by-mail accounts. Then for the one month Qwikster existed, it did nothing but foster ill will toward Netflix.

Qwikster lacked the all-important grandfather clause that prevents impacting existing customers. It required all Netflix/Qwikster users to create two accounts at two different domain names with two credit card statements and two sets of ratings and preferences – not to mention pay 60 percent more for the exact same services.

The funniest part about the whole lack of clear communication on Netflix’s part is that a pot-smoking teenager already owned the Twitter handle @Qwikster at the time of the split, making customers even more confused if they attempted to tweet a complaint. All customers could see on that Twitter account was ramblings about boredom, smoking and partying.

In the end, Netflix’s marketing faux pas cost the company 800,000 subscribers and its stock price plummeted 77 percent in four months.

Everyone knows that businesses need to remain agile in an ever-changing market, but clear communication is the key to making changes without infuriating customers. Choosing a respectable name for the media company such as “Netflix Online” or “Netflix Streaming” would also have undoubtedly reduced the mockery and derision the short-lived Qwikster received.

For more information about the importance of clear communication in a professional business environment, contact  Hurley Write, Inc  . We offer  writing courses  to help improve your business communication prowess.

Related Articles:

6 tips to nail the last impression: how to end a presentation like a pro, elevate your career with expert presentation skills training, 5 engaging powerpoint presentation examples to wow your audience.

• Becoming a Better Writer

Related Courses:

• Building Better PowerPoints and Visuals
• Effective Strategies for Writing with Artificial Intelligence (AI)
• Exceptional Technical Writing 
• Technical Writing for Engineers

If you want to learn more, sign up to our newsletter.

• Proposal Writing
• Writing for Financial Professionals

if you want to learn more about insert article name here.

Rela ted blogs.

• August 27, 2024
• August 13, 2024
• August 5, 2024

Subscribe to our newsletter for new insights about writing.

• 1-877-249-7483
• [email protected]

Our Workshops

• For Individuals
• Communication Audits

Industries we Work With

• Pharma & Biotech
• Energy, Oil & Gas
• Finance & Accounting
• Engineering
• Manufacturing
• White Papers
• Workshop Catalog

why hurley write

• Meet Our Team
• Our Clients
• Case Studies

Contact Hurley Write, Inc.

We are in the process of moving to a new publishing and commerce platform and have suspended sales of "raw" cases until further notice. Our "cooked" cases will still be available up to the transition to the new store, which will open at the start of the Spring, 2025 semester. If you are a bulk educational customer from a university or other accredited institution and need to purchase "raw" cases in the interim, please email us at [email protected]. Thank you for your patience!

Netflix and Qwikster

Cooked, document.

In 2011, Netflix announced changes that observers characterized as among the greatest missteps in the history of corporate strategy. First, the company significantly raised prices. Then, Reed Hastings, the founder and CEO of Netflix, described plans to split the company between streaming and disc rental, spinning off the DVD-rental business to a new entity called Qwikster. The outrage from customers and investors was extreme. Within two weeks, Hastings reversed the plan to split the company (though maintaining the price increases). During the debacle, Netflix lost 2 million subscribers and the stock dropped more than 75 percent in value.

Before his controversial move to split the company, Reed Hastings had built a reputation as a savvy businessman. He founded Netflix in 1998 as a DVD rental business, which allowed subscribers to order discs online and then receive and return the DVDs through the mail. By the end of 2010, Netflix had grown to 20 million subscribers, gained revenues of over $2.1 billion, and delivered net income of $160 million. The company had crushed its bricks and mortar competitors in DVD rental. Other competitors that had tried to mimic Netflix’s net and mail service had failed to find subscribers and had similarly fallen by the wayside.

In addition to its success with DVDs, Netflix had established a growing online video-on-demand service. Hastings believed internet streaming would be the future of content delivery and increasingly described Netflix as "a streaming company, which also offers DVD-by-mail." Many investors seemed convinced – by early July 2011 the stock price had reached $304, giving Netflix a market capitalization of over $16 billion.

But then came Hastings’s disastrous decision and its reversal. In the year since, Netflix had not managed to convince investors that it knew the way forward. Observers noted that the company was attempting to compete in two fundamentally different businesses with the same list of subscribers. While the company was the leader in the physical rental of DVDs, the streaming video space was becoming more crowded, and Netflix’s success hardly seemed assured. Could Hastings find some way to leverage success in one type of business to overcome the obstacles in another?

Published Date: 15/08/2012

Suggested Citation: Sharon M. Oster, M. Keith Chen and Jean W. Rosenthal, "Netflix and Qwikster," Yale SOM Case 12-019, August 15, 2012.

Keywords: United States, Media, Distribution, Streaming Services

• Share Share on Facebook
• Tweet Tweet on Twitter
• Pin it Pin on Pinterest

• Order Status
• Testimonials
• What Makes Us Different

Netflix Inc. Harvard Case Solution & Analysis

Home >> Harvard Case Study Analysis Solutions >> Netflix Inc.

Netflix Inc. Case Study Solution

This case introduces Netflix, a company engaged in the business of providing entertainment services via DVD distribution and online video streaming. It can be assessed that, the company had seen tremendous growth since in incorporation in the year 1997 by its founders Marc Randolph and Reed Hastings headquartered in Scott’s valley, California. Reed got the inspiration for the business, when he paid $40for an overdue video. The main business model of Netflix was to provide movies on $6 per rental initially. Later, the company moved to monthly subscriptions by the year 1999 and then towards single rental model. This, in turn, enabled them to develop a strong reputation among the customers. Allowing its customers to incur flat fees unlimited rentals per month without any late fees or shipping and handling charges. However, it was illustrated in the case, that Netflix was faced by an adverse situation, when it decided to separate its DVD distribution division from its online streaming and rebrand it as Qwikster. This exposed them to customer’s outrage and confusion, adversely affecting its profitability and position in the market. Furthermore, its price spikes cause the loss of 800,000 subscribers in the U.S alone by the year 2011 and it was expected these number would increase in the future. Despite the adverse effect of Rebranding debacle and price spikes to cover increasing content costs, the company was optimistic about the future and believed that by providing cheaper and commercial free streaming of movies and TV shows. It would be able to reach its strategic objective of becoming, the leading provider and distributor entertainment platform in the world. Therefore, it was evaluated that, the senior management of the company needed to develop effective and efficient strategies that would align the business function to its strategic objectives, while allowing the company to gain significant share of the market.

Netflix was established in 1997 by Marc Randolph and Reed Hastings in Scott’s valley, California. After its incorporation and experiencing significant growth, the company went public and offered its IPO. Which enabled them, to sell 5.50 million shares at $15 per shares, which contributed towards raising $82.5 million in share capital. It can be assessed, despite facing losses during its initial period of operation, it was able to generate a profit amounting to $6.50 million in 2003. Furthermore, it can be evaluated that, it’s subscriber’s growth from 1 million in 2002 to 27 million in 2012. This allowed them, to enhance their financial as well as market position, while gaining appeal amongst the customers available in the market. It can be assessed that, by 2012 it had 100,000 titles distributed through 50 shipment centers, with minimal delivery time amounting to 1-2 business days. Therefore,enabling the company to become a profitable and successful venture. Netflix was able to employ and sustain around 4,100 employees. However, it can be evaluated that, Netflix expanded its first international operation to Canada, offering online streaming service and later expanded to other parts of the world.

Reed Hastings was the founder and CEO of Netflix and was responsible for making key decisions for the company and was responsible for aligning the strategies of the company to its strategic goals. Most recently, its chief marketing officer was Kelly Bennett and Chief Communication Officer was Jonathan Friedland. Along with, Tawni Cranz appointed as its Chief Talent Officers, Neil Hunt as its chief product officer and Greg Peters as its international development officer. Furthermore, Ted Sarandos working as its Chief Content officer and David Wells appointed as its Chief Financial officer. Moreover, as the Director, Richard Barton holding the Executive Chairman of the Board along with Timothy Haley, A. George (Skip) Battle, Jay Hoag, Leslie Kilgore, Ann Mather, Brad Smith and Anne Sweeney.

Content Analysis

External Analysis

It can be determined that, due to the increasing content cost, the company had to increase its prices,which had significantly harmed the user subscription base of the company, showing a decline in the number of subscribers amounting to 800,000 and this number was expected to increase in the future. However, it can be evaluated that, the senior management of the company did not anticipate the upsetting results their strategic decision had on their profitability and position in the market. Therefore, the decision of increasing their service prices damaged their overall growth prospect in the market and exhibited a steep decline in their subscriber base. Which they had gained over the years , by maintaining and sustaining strong reputation in the market. This had allowed them to secure sufficient share in the market, while increasing their services appeal among the customers.

Netflix Inc. Harvard Case Solution & Analysis

Furthermore, it can be evaluated that, the senior management didn’t anticipate the adverse effects their inflated pricing policy would have on the brand image of the company and its future implication. It was estimated that, the subscribers would continue to decline, if the company maintains the same pricing policy. This could be attributed to the customer’s perception regarding its services. The customers gave preference to Netflix over going to the theater, in an attempt to save cost. Therefore, when the company increased its prices, this perception of the subscribers was challenged and resulted in them losing interest in the services provided by the company. Most of the customers could have regarded the increase, in a way, where they preferred theaters over the high prices of Netflix. Which, in turn, exposed company to certain risks and gave its competitors an opportunity to secure sufficient share of the market for themselves, as the brand image of Netflix was compromised in the market..................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

Related Case Solutions & Analyses:

Hire us for Originally Written Case Solution/ Analysis

Like us and get updates:.

Harvard Case Solutions

Search Case Solutions

• Accounting Case Solutions
• Auditing Case Studies
• Business Case Studies
• Economics Case Solutions
• Finance Case Studies Analysis
• Harvard Case Study Analysis Solutions
• Human Resource Cases
• Ivey Case Solutions
• Management Case Studies
• Marketing HBS Case Solutions
• Operations Management Case Studies
• Supply Chain Management Cases
• Taxation Case Studies

More From Harvard Case Study Analysis Solutions

• CITC and Arthur D. Little: Deregulation and Liberaisation of the Saudi Telecom Sector (B)
• Competitor Analysis: Anticipating Competitive Actions
• Novartis: The Challenge of Success (D)
• Quality Waste Removal
• Heinz Corporation
• Bibd Statistics Assignment
• Designing Marketing Experiments

Contact us:

Check Order Status

How Does it Work?

Why TheCaseSolutions.com?

Is Netflix As Dumb As It Seems?

The strange logic of the company’s decision to divide itself in half..

Reed Hastings made his fortune with one exceedingly smart insight: People would pay a lot to escape video-store late fees. Ever since, the Netflix founder and CEO has devotedly sought out and implemented clever ideas for running a tech business. In 2006, he launched a $1 million prize to inspire computer scientists to improve Netflix’s movie recommendations algorithm. It was a great deal , giving Netflix the work of thousands of Ph.D.s for the equivalent of minimum wage. Or consider the company’s unusual work environment : Employees are allowed to take as much vacation as they want. In exchange for this freedom, Netflix employees are expected to be outstanding at their jobs. “We’re like a pro sports team, not a kid’s recreational team,” says an internal H.R. document . If your manager thinks you’re merely doing your job well, you will receive “a generous severance package.”

It’s this same enthusiasm for shaking up business as usual that’s at the center of Netflix’s recent troubles. In July, the company announced that it would raise the price of its combo DVD and streaming plan to $15.98 a month, from $9.99; its streaming-only plan would remain $7.99. The move angered customers, and last week Netflix lowered its latest subscriber forecast . The company’s stock tanked. Then, on Sunday, Hastings emailed an “apology” to users for the way he handled the price hike. But his remedy is worse than the original offense. Hastings is now going to separate Netflix’s DVD and streaming businesses into two different brands. The online half will be called Netflix, while the DVD-by-mail portion will be called Qwikster. The two services won’t share anything—your queues, ratings, and even your billing information will remain distinct on each site. In a sign of how hastily Netflix arrived at this idea, it seems to have forgotten to search for @qwikster on Twitter. That handle is owned by a person whose avatar is an image of Elmo smoking a joint.

Which raises the question: What is Reed Hastings smoking? As far as anyone can tell, he seems to have rolled up pages from The Innovator’s Dilemma , Clayton Christensen’s influential 1997 book about the ways that successful companies die at the hands of upstarts. Christensen, a professor at Harvard Business School, coined the term “ disruptive technology ,” which describes innovations that come out of nowhere to undercut a market leader’s dominant position. Christensen cited the way that Digital Equipment, the leader in 1970s-era corporate minicomputers , completely missed the 1980s boom in personal computers. But a better example may be Netflix itself—its all-you-can-eat business model disrupted, and eventually killed, the previously dominant Blockbuster model for movie rentals. Hastings is likely paranoid, then, that Netflix is vulnerable to the same kind of disruption. And that’s the logic behind the mail/streaming separation. Hastings would prefer to kill his own golden goose before anyone else beats him to it.

I think it’s an idiotic strategy. Most of Netflix’s customers subscribe to both DVDs and streaming, and if they’re like me, they like the service because it enables both not-so-picky instant gratification and well-considered delayed gratification. I use the DVD service to select movies that I really want to watch and am willing to wait for; I use the streaming service when I want to watch something—and pretty much anything—right now. I can keep doing this after the DVD plan is renamed Qwikster, but it will require more work. If I search for a movie on Qwikster, it won’t tell me that the movie can be seen for free, right now, on Netflix. If I search for a movie on Netflix and don’t find it, it won’t let me add it to my DVD queue. Say I watch a bunch of DVDs starring Kevin Spacey and then give them all a one-star rating. (I can’t stand Kevin Spacey.) Because the two services will have separate ratings databases, Netflix might just recommend that I watch a Spacey marathon.

And yet: It could work. In The Innovator’s Dilemma , Christensen argues that the companies that are most vulnerable to disruptive technologies are those that have really good management. The problem with good managers is that they tend to listen to customers. And the problem with customers is that they don’t always know what’s best for them. If you were a devoted Blockbuster customer in 2001, and if Blockbuster’s CEO sent you an email announcing he was closing all the company’s stores and switching to a DVD-by-mail service, you would have balked. From now on you’d have to wait three days for a movie? You’d have to choose your movie on your computer—how would you do that when you didn’t even have Internet service? You’d have to pay a monthly fee? What if you just watched one movie a month? All of this would have sounded like too much hassle.

As Christensen explains, disruptive technologies usually start out as inferior substitutes, proving attractive only to a small fringe of customers. For years, the people who ran Blockbuster saw Netflix as irrelevant. It’s easy to call them stupid now, but at the time they were mostly right. Blockbuster’s customers considered Blockbuster better than all the alternatives; if they didn’t, they wouldn’t have been Blockbuster customers. And Blockbuster’s managers were doing what good managers do—they were investing in the parts of the business that customers liked (opening more stores) rather than coming up with a whole new business that might alienate their current users.

The key advantage of Netflix’s new model is that it will give each side of the business—the DVD side and the streaming side—flexibility to manage its service in a way that pleases its own customers. As a combined service, any move to strengthen one side of the company over the other would have been perceived negatively by one group of customers. Netflix believes that its DVD shipments will peak in 2013 ; after that, as fewer and fewer people subscribe to DVDs, it’s going to have to raise prices to support the physical infrastructure needed to ship out the discs. Now it will be Qwikster that will suffer the negative reaction to all future price hikes—and Netflix that will benefit from the customers getting rid of their DVD plans.

This plan is also straight out of The Innovator’s Dilemma : “With few exceptions,” Christensen writes, “the only instances in which mainstream firms have successfully established a timely position in a disruptive technology were those in which the firms’ managers set up an autonomous organization charged with building a new and independent business around the disruptive technology.” Christensen argues that setting up a separate organization allows the disruptive side to ignore customers who like the mainstream side. “There are times at which it is right not to listen to customers,” he writes.

In other words, if you feel that Netflix’s new pricing and the company’s division into two entities is an alienating move, you’re completely right. That’s the whole point.

Leave your feedback

• Copy URL https://www.pbs.org/newshour/economy/in-wake-of-qwiksters-hasty-death-netflix-faces-questions-of-its-own

In Wake of Qwikster’s Hasty Death, Netflix Faces Questions of Its Own

It’s a slightly existential question one might pose to those who would have run Qwikster, the DVD-by-mail business that Netflix said it was launching just three weeks ago. Today, Netflix CEO Reed Hastings announced that Qwikster will never see the light of day. So Netflix is facing some pressing questions: Is the market losing faith in the company? And just how much self-inflicted damage has Netflix done to itself this summer and fall?

Investors who have been dropping the stock in recent weeks, ever since Netflix announced it would raise prices, appear none too pleased by the way it’s all been handled so far.

True, shares rallied initially when Hastings posted a blog explaining that Netflix had been too hasty with its decision to split up its streaming video and DVD-by-mail businesses and angered customers. But by the end of the day Netflix fell from $125 a share to roughly $111.

Market analysts said Netflix made the right decision in bowing to customer anger and outrage over Qwikster.

But Hastings did say that Netflix intends to continue apace with its new pricing plans, which would raise prices by about $6 a month for those who wish to both watch videos online and receive DVDs by mail.

The company has already made it clear that it expects to lose a million customers in the third quarter of the year. Bear in mind, Netflix is still the giant in the industry with a subscriber base of roughly 25 million.

The question now, is whether this change stops the bleeding, whether the pricing changes will lead to a continuing erosion of its customer base — and whether there’s a sense that Netflix may no longer be quite at the peak of its game in an ever-changing digital media business.

On All Things Digital, Peter Kafka wrote:

“Stock moves aside, the about-face — three weeks after an announcement that itself seemed rushed — is a little hard to square with the aura that used to surround Netflix, and Hastings in particular: Super smart, able to see around corners, not afraid to run against the herd. “Because if Netflix really thought that ‘over time, both DVD and streaming will be much better, because they’re separate,’ as Hastings put it in a much-unloved video message last month, why reverse the decision after some squawking?”

The other question lurking for Netflix is whether its online streaming site c an provide enough content to keep customers happy .

The New York Times’ Brian Stelter pointed out today Netflix will lose streaming rights to films from Walt Disney and Sony next year . But, as he also noted, the company also has announced a new deal to stream the films of DreamWorks Animation.

And the company is getting into the content business itself with a new drama called “House of Cards” and the possible distribution of new episodes of “Arrested Development.”

Murrey Jacobson is the National Affairs editor. Follow him on Twitter .

Support Provided By: Learn more

Educate your inbox

Subscribe to Here’s the Deal, our politics newsletter for analysis you won’t find anywhere else.

Thank you. Please check your inbox to confirm.

Reed Hastings On Netflix’s Biggest Mistake

In an exclusive excerpt from  no rules rules , the billionaire founder of the streaming giant rewinds history to look at how he almost missed the big picture..

A t most companies, the manager’s role is to approve or block the decisions of employees. This is a surefire way to limit innovation and slow down growth. At Netflix, we emphasize that it’s fine to disagree with your manager and to implement an idea she dislikes. We don’t want people putting aside a great idea because the boss doesn’t see how great it is. That’s why we say: DON’T SEEK TO PLEASE YOUR BOSS. SEEK TO DO WHAT IS BEST FOR THE COMPANY. They are not always the same thing. It’s one of the many ways that we give our employees freedom and responsibility that is far beyond what many other organizations typically do. 

Good decisions, however controversial, require a solid grasp of the context, feedback from people with different perspectives, and awareness of all the options. If someone uses the freedom Netflix gives them to make important decisions without soliciting others’ viewpoints, we consider that a demonstration of poor judgment. One way to collect those viewpoints is to “farm for dissent,” or “socialize” the idea.

This premise of farming for dissent came out of the Qwikster debacle, the biggest mistake in Netflix history . In early 2011, we offered one service for ten dollars that was a combination of mailing DVDs and streaming. But it was clear that streaming video would become of increasing importance while people would watch fewer and fewer DVDs.

In Your Cart: With Qwikster, Hastings tried (and failed) to separate Netflix's DVD rental business from its streaming service.

We wanted to be able to focus on streaming, without DVDs distracting us, so I had the idea to separate the two operations: Netflix would stream, while we created a new company, Qwikster, to handle the DVD market . With two separate companies, we would charge eight dollars for each service separately. For customers who wanted both DVDs and streaming, it meant a price hike to sixteen dollars. The new arrangement would allow Netflix to focus on building the company of the future without being weighed down by the logistics of DVD mailing, which was our past.

Although the thinking behind the move—that streaming would be our future—was correct, the announcement provoked a customer revolt. Not only was our new model way more expensive, but it also meant customers had to manage two websites and two subscriptions instead of one. Over the next few quarters, we lost millions of subscribers and our stock dropped more than 75 percent in value. Everything we’d built was crashing down because of my bad decision. It was the lowest point in my career—definitely not an experience I want to repeat. When I apologized on a YouTube video, I looked so stressed that Saturday Night Live made fun of me .

But that humiliation was a valuable wake-up call, because afterward dozens of Netflix managers and VPs started coming forward to say they hadn’t believed in the idea. One said, “I knew it was going to be a disaster, but I thought, ‘Reed is always right,’ so I kept quiet.” A guy from finance agreed, “We thought it was crazy, because we knew a large percentage of our customers paid the ten dollars but didn’t even use the DVD service. Why would Reed make a choice that would lose Netflix money? But everyone else seemed to be going along with the idea, so we did too.” Another manager said, “I always hated the name Qwikster, but no one else complained, so I didn’t either.” Finally, one VP said to me, “You’re so intense when you believe in something, Reed, that I felt you wouldn’t hear me. I should have laid down on the tracks screaming that I thought it would fail. But I didn’t.”

The culture at Netflix had been sending the message to our people that, despite all our talk about candor, differences of opinion were not always welcome. That’s when we added a new element to our culture. We now say that it is unacceptable and unproductive when you disagree with an idea and do not express that disagreement. By withholding your opinion, you are implicitly choosing to not help the company. I can’t make the best decisions unless I have input from a lot of people. That’s why I and everyone else at Netflix now actively seek out different perspectives before making any major decision.

We call it farming for dissent . Normally, we try to avoid establishing a lot of processes at Netflix, but this specific principle is so important that we have developed multiple systems to make sure dissent gets heard. For example, if you are a Netflix employee with a proposal, you create a shared memo explaining the idea and inviting dozens of your colleagues for input. They will then leave comments electronically in the margin of your document, which everyone can view. Simply glancing through the comments can give you a feeling for a variety of dissenting and supporting viewpoints.

The author on the October 2020 cover.

In some cases, an employee proposing an idea will distribute a shared spreadsheet asking people to rate the idea on a scale from –10 to +10, with their explanation and comments. This a great way to get clarity on how intense the dissent is and to begin the debate. Before one big leadership meeting, I passed around a memo outlining a proposed one-dollar increase in the price of a Netflix subscription along with a new tiered-pricing model. Many dozens of managers weighed in with their ratings and comments. The spreadsheet system is a super-simple way to gather assent and dissent, and when your team consists entirely of top performers, it provides extremely valuable input. It’s not a vote or a democracy. You’re not supposed to add up the numbers and find the average. But it provides all sorts of insight. I use it to collect candid feedback before making any important decision. The more you actively farm for dissent, and the more you encourage a culture of expressing disagreement openly, the better the decisions that will be made in your company. This is true for any company of any size in any industry. 

'No Rules Rules' co-authors Erin Meyer and Reed Hastings.

For smaller initiatives, you don’t need to farm for dissent, but you’d still be wise to let everyone know what you’re doing and to take the temperature of your initiative. Socializing is a type of farming for dissent with less emphasis on the dissent and more on the farming. In 2016, I had a personal experience where socializing an idea led me to change my own opinion. Up until then I believed strongly that kids’ TV shows and movies would not bring new customers to Netflix or even retain the customers we had. Who signs up to Netflix for a children’s show? I was convinced adults choose Netflix because they love our content. Their kids will just watch whatever we have available. So when we began producing original programs, we focused on adult content only. For kids, we continued to license shows from Disney and Nickelodeon. And when we did release our own Netflix kids shows, we didn’t put much money into them, not in the way Disney did. The kid’s content team disagreed with this approach: “These are the next generation of Netflix customers,” they argued. “We want them to love Netflix as much as their parents do.” They wanted us to start producing original kids’ content as well.

Penguin Random House

I didn’t think that was a great idea but I socialized it anyway. At our next quarterly leadership meeting we placed our top four hundred employees at sixty round tables in groups of six or seven. They received a small card with this question to debate: Should we spend more money, less money, or no money on kids’ content? There was a tsunami of support for investing in kids’ content. One director who is also a mom got up onstage and passionately declared, “Before working here I subscribed to Netflix exclusively so my daughter could watch Dora the Explorer . I care a lot more about what my kids watch than what I watch myself.” A father came up and announced, “Before coming to Netflix I only subscribed because I could trust the content for my children.” He explained why: “On Netflix there’s no advertisements like on cable and no dangerous rabbit holes for my son to fall down like when he surfs on YouTube. But if he hadn’t been crazy about what Netflix was offering, he’d have stopped watching and we’d have canceled the subscription.” One after another our employees were stepping onto that stage and telling me I was wrong. They believed kids shows were critical to our customer base.

Within six months we’d hired a new VP of kids and family programming from DreamWorks and started making our own animated features. After two years we’d tripled our kids’ slate, and in 2018 we were nominated for three Emmys for our original kids shows Alexa and Katie , Fuller House , and A Series of Unfortunate Events . To date, we’ve won over a dozen Daytime Emmys for children’s programs like The Mr. Peabody and Sherman Show and Trollhunters: Tales of Arcadia, from Guillermo Del Toro. If I hadn’t taken the time to socialize the idea, none of this could have happened.

From No Rules Rules by Reed Hastings and Erin Meyer. Published by arrangement with Penguin Press, a member of Penguin Random House, LLC. Copyright (c) Netflix, Inc., 2020.

• Editorial Standards
• Reprints & Permissions

Join The Conversation

One Community. Many Voices. Create a free account to share your thoughts. 

Forbes Community Guidelines

Our community is about connecting people through open and thoughtful conversations. We want our readers to share their views and exchange ideas and facts in a safe space.

In order to do so, please follow the posting rules in our site's  Terms of Service.   We've summarized some of those key rules below. Simply put, keep it civil.

Your post will be rejected if we notice that it seems to contain:

• False or intentionally out-of-context or misleading information
• Insults, profanity, incoherent, obscene or inflammatory language or threats of any kind
• Attacks on the identity of other commenters or the article's author
• Content that otherwise violates our site's  terms.

User accounts will be blocked if we notice or believe that users are engaged in:

• Continuous attempts to re-post comments that have been previously moderated/rejected
• Racist, sexist, homophobic or other discriminatory comments
• Attempts or tactics that put the site security at risk
• Actions that otherwise violate our site's  terms.

So, how can you be a power user?

• Stay on topic and share your insights
• Feel free to be clear and thoughtful to get your point across
• ‘Like’ or ‘Dislike’ to show your point of view.
• Protect your community.
• Use the report tool to alert us when someone breaks the rules.

Thanks for reading our community guidelines. Please read the full list of posting rules found in our site's  Terms of Service.

• Books & Reports
• Product-led Growth
• Pricing & Positioning

Netflix Pricing Strategy: Learning from Qwikster Mistakes

Brandon Hickie

January 6, 2014

Pricing Changes Can Be Risky Business: Just Ask Netflix

Rolling out a new pricing model is a touchy issue, especially when it involves increasing prices or moving towards usage-based pricing. Price changes can jar loose the backbone of the customer-vendor/service provider relationship. They can have a major impact on customer expectations, trust, and how the customer wants to/is willing to interact with the vendor/service provider. Altering these dynamics can forever change that relationship and consequently make pricing strategy very tricky for management teams to plan-out. Management teams constantly fight over striking the right balance between leaving revenue on the table and jeopardizing customer loyalty and satisfaction. Learning how to find this balance can be a fatal experiment in an executive team’s tenure. It can also become a landmark strategic move that forever changes a business or even an entire market.

5 Lessons in Pricing Strategy

Below are five lessons on developing and implementing pricing strategies you can learn from recent moves by Verizon, Netflix and Major League Baseball.

1) Be open, transparent, and notify customers of upcoming changes in advance.

No one likes to be caught off-guard or lied to, and if you get caught doing so, your customers will forever remember how you treated them. Do yourself a favor and err on the side of caution. If you’re considering changes to your pricing model, be sure to reach out to your customers early on and share the reasons why these changes are happening. What not to do: Netflix could have prevented significant brand damage had it let its customers know about its pricing changes months in advance.

2) Get real with your customers and educate them about how the market is changing.

Believe it or not, customers can be reasonable about changes, especially if you’re clear with them about your reasoning. Let them know where you will be taking the business and they will not be surprised when you roll-out the changes. This will help you manage expectations and enable you to have more flexibility in adapting your pricing to deal with changing market dynamics.

3) Gradual changes are much easier for customers to swallow.

Good example: Verizon used plan grandfathering to slowly roll-out its move towards a pay-per-usage data model, and also provided customers with a data usage tool. This helped customers get accustomed to the changes and learn how they would impact them before they went into effect.

4) Test pricing models with market research or via a controlled experiment with a small set of customers first.

This can give you a glimpse into what the actual market reaction will be prior to committing to a change. Good example: The San Francisco Giants rolled-out dynamic ticket pricing for a couple games to test potential fan reaction and prove the benefits before they committed to it as a long-term strategy.

5) Monopolist power does not always mean that your customers are powerless.

They always have the option of foregoing your service. What not to do: Again, Netflix learned this lesson the hard way. In the aftermath of Qwikster the company faced a mass customer exodus. Netflix was lucky enough to recover from this error. Many companies and management teams would not have been so lucky.

How Netflix Learned Its Pricing Lesson(s)

Why learn the hard way, firsthand, when you can learn from the mistakes of others? Most great strategies are a derivative of another great company’s strategy. It is important to study the history of business so you can leverage other experiences to position your company best in the market. There is a reason why Apple and Google are investing so much money in their corporate education programs to teach future leaders of their companies about key decisions the company has made and why they worked or failed.

Marketing Manager, Pricing Strategy

<strong>Brandon Hickie</strong> is Marketing Manager, Pricing Strategy at <a href="https://www.linkedin.com/">LinkedIn</a>. He previously worked at OpenView as Marketing Insights Manager. Prior to OpenView Brandon was an Associate in the competition practice at Charles River Associates where he focused on merger strategy, merger regulatory review, and antitrust litigation.

What’s in store for B2B marketing in 2024. Marketing expert Jon Miller shares his eight game changing predictions here.

Software buying has evolved—and companies are moving to a usage-based pricing model to stay ahead of the curve. Get started with this playbook.

Subscribe & Scale

Sign up for our newsletter.

• By submitting your information, you agree to receive periodic emails from OpenView. Please review our privacy policy here .
• Comments This field is for validation purposes and should be left unchanged.

Share on Mastodon

Navigation Menu

Search code, repositories, users, issues, pull requests..., provide feedback.

We read every piece of feedback, and take your input very seriously.

Saved searches

Use saved searches to filter your results more quickly.

To see all available qualifiers, see our documentation .

• Notifications You must be signed in to change notification settings

Latest commit

File metadata and controls, netflix case study (eda): unveiling data-driven strategies for streaming, project details.

In this project, we embark on an exciting journey to explore the intriguing patterns, trends, and insights hidden within Netflix’s content landscape. Leveraging the power of Python and its data analysis libraries, we dive into the vast collection of Netflix’s offerings to uncover valuable information that sheds light on content additions, duration distributions, genre correlations, and even the most commonly used words in titles and descriptions.

Netflix’s Global Reach

Netflix has experienced remarkable growth and expanded its presence to become a dominant force in the streaming industry. Here are some noteworthy statistics that showcase its global impact:

User Base: By the beginning of the second quarter of 2022, Netflix had amassed approximately 222 million international subscribers, spanning over 190 countries (excluding China, Crimea, North Korea, Russia, and Syria). These impressive figures underline the platform’s widespread acceptance and popularity among viewers worldwide.

International Expansion: With its availability in over 190 countries, Netflix has successfully established a global presence. The company has made significant efforts to localize its content by offering subtitles and dubbing in various languages, ensuring accessibility to a diverse audience.

Table of Contents

Introduction, data preparation, exploratory data analysis.

As one of the leading streaming platforms globally, Netflix has revolutionized how we consume entertainment. With its vast library of movies and TV shows, it offers an abundance of choices for viewers around the world.

The data used in this case study is sourced from Kaggle, a popular platform for data science and machine learning enthusiasts. The dataset, titled Netflix Movies and TV Shows , is publicly available on Kaggle and provides valuable information about the movies and TV shows on the Netflix streaming platform.

Dataset Overview

Distribution of Content Types

To determine the distribution of content in the Netflix library, we calculated the percentage distribution of content types (movies and TV shows). The pie chart visualization reveals that approximately 70% of the content on Netflix consists of films, while the remaining 30% are TV shows.

Top 10 Countries Where Netflix is Popular

The bar chart visualization shows that the United States is the top country where Netflix is popular, indicating a significant user base in this region.

Top 10 Actors by Movie/TV Show Count

Identifying the top 10 actors with the highest number of appearances in movies and TV shows, the bar chart displays that Anupam Kher has the highest number of appearances in Netflix content.

Top 10 Directors by Movie/TV Show Count

The bar chart showcases the top 10 directors with the most movies or TV shows in the Netflix library, with Rajiv Chilaka leading in the number of content directed.

Top 10 Categories by Movie/TV Show Count

The bar chart displays the top 10 categories of movies and TV shows based on their count, with "International Movies" being the most dominant category, followed by "Dramas."

Movies & TV Shows Added Over Time

The line chart illustrates the number of movies and TV shows added to Netflix over time. Notably, Netflix experienced substantial growth starting from 2015, adding more movies than TV shows over the years. The drop in content addition in 2020 could be attributed to the pandemic situation.

Content Added by Month

Analyzing the month-wise distribution of content additions, the bar chart reveals that July and December are the months when Netflix adds the most content to its library. This information can be valuable for viewers anticipating new releases during these months.

Distribution of Ratings

The bar chart visualizes the distribution of ratings on Netflix, providing insights into the most common rating categories and their relative frequency.

Genre Correlation Heatmap

The heatmap demonstrates the correlation between different genres, revealing interesting relationships between specific types of content. Strong positive associations, such as between TV Dramas and International TV Shows, Romantic TV Shows, and International TV Shows, can be identified.

Most Common Words in Titles and Descriptions

Analyzing the most common words used in titles and descriptions provides insights into the themes and content focus on Netflix. Word clouds help uncover these patterns based on the titles and descriptions of Netflix’s content.

Duration Distribution for Movies and TV Shows

Analyzing the duration distribution for movies and TV shows, the box plots reveal that most movies fall within a reasonable duration range, with few outliers exceeding approximately 2.5 hours. For TV shows, most have one to four seasons, aligning with the trend that Netflix focuses on shorter series formats.

Our analysis revealed that Netflix has a higher quantity of movies compared to TV shows, aligning with the expectation that movies dominate their content library.

Content Addition:

July emerged as the month when Netflix adds the most content, closely followed by December, indicating a strategic approach to content release, potentially capitalizing on holiday seasons and summer breaks.

Genre Correlation:

Strong positive associations were observed between various genres, such as TV dramas and international TV shows, romantic and international TV shows, and independent movies and dramas. These correlations provide valuable insights into viewer preferences and content interconnections, aiding content curation and recommendation systems.

TV Show Episodes:

Most TV shows on Netflix have one season, suggesting a preference for shorter series among viewers. This aligns with the trend in the streaming industry towards binge-watching shorter, more focused content.

Common Themes:

Words like love, life, family, and adventure were frequently found in titles and descriptions, capturing recurring themes in Netflix content. Understanding these common themes can be crucial for content creators and marketers aiming to resonate with viewers.

Rating Distribution:

The distribution of ratings over the years offers insights into the evolving content landscape and audience reception. Analyzing changes in ratings distribution can provide clues about shifts in viewer preferences and content quality.

Data-Driven Insights:

Our data analysis journey showcased the power of data in unraveling the mysteries of Netflix’s content landscape. The insights gained provide valuable information for both viewers seeking content and content creators aiming to tailor their productions to audience preferences.

Continued Relevance:

As the streaming industry evolves, understanding these patterns and trends becomes increasingly essential for navigating the dynamic landscape of Netflix and its vast library. Continuous data analysis and adaptation to changing viewer behaviors will be crucial for Netflix's continued success in the competitive streaming market.

Netflix cancels Qwikster spinoff

Qwikster, we hardly knew you. Netflix reverses decision to split into two separate services. Subscribers will continue to access streaming and DVDs from the Netflix site.

Netflix's leadership has decided not to follow through with a plan to spin off the company's DVD-by-mail operations.

What that means is the service, called Qwikster, is dead, at least for now, barely three weeks after managers disclosed their intentions. It also means Netflix customers get something akin to their old service back, the one that enabled them to go to one site to watch videos streamed over the Web as well as order DVDs for home delivery. Netflix, however, didn't back down on price; access to movies streamed over the Internet as well as DVD rentals will still cost $16 per month.

Last month, Hastings riled already frustrated subscribers by telling them that Netflix was dedicating itself only to streaming . If they wanted to rent discs they would have to go to Qwikster, which would require a visit to a new Web site as well as a new account, password, and even an extra monthly bill. Critics said Netflix was doing the unthinkable : making a successful, simple service more complicated. Michael Pachter, an analyst who has covered Netflix for years, called the move the "dumbest" he's seen any company make in a long time.

Apparently, Netflix got the message.

"Consumers value the simplicity Netflix has always offered and we respect that," Hastings said in a statement. "There is a difference between moving quickly...and moving too fast, which is what we did in this case."

The public got word about Qwikster two months after Netflix announced it would discontinue a popular subscription plan that offered access to the company's streaming video library as well as DVD rentals for $10 per month. Scores of subscribers were angered that Netflix would charge $8 for streaming access and an additional $8 for DVDs, raising the price $6.

Well, at least Netflix reversed itself on Qwikster and that should be welcome news for subscribers. Hastings, who is recognized as one of the tech sector's most consumer-friendly CEOs, is coming to the public once more, hat in hand, admitting he erred . He said last month that he "slipped into arrogance" for the cavalier way the company delivered the news about the price increase.

We can only hope that the CEO realizes now that all the consumer goodwill he generated over a decade--ridding us of late fees and long waits at traditional video stores--is not to be trifled with . What Netflix needs now is some stability.

Whatever is going on internally that has Hastings and crew making uncharacteristic mistakes, he should take pains to find their source and fix them.

I think subscribers will get over the price increase , as long as Netflix continues to build out the streaming service. The bigger the selection, the smaller the price hike will seem. So, hopefully that is Netflix's No. 1 priority, along with not generating any more headlines.

NetFlix and Qwikster Case Study Solution- How to Stream Netflix to Your Computer Case Solution & Answer

Home » HBR Case Studies » NetFlix and Qwikster Case Study Solution- How to Stream Netflix to Your Computer

The first thing that you should understand is that Netflix is probably the most popular website in the world, it’s used by millions of people and has millions of movies, shows, and other types of media files that you can stream. Therefore, it needs to be able to stream smoothly, just like you would expect it to on your computer.

It’s not so much the hardware or software as it is the way that they are set up that causes this, though. If you think about it, you use the same methods that you would use to turn on your computer if you were using a computer; it’s just that you’re not inside of a computer.

However, if you use one of the streaming services, the file type has to be recognized by the computer in order for it to be viewed. In order to do this, you need to use an application called “Internet Explorer”.

You need to use Internet Explorer in order to set up the streaming software for Netflix that you use. Of course, the software itself won’t know the file type, but you need to use this program to help it figure it out.

After you have downloaded the Internet Explorer program and installed it on your computer, you need to run it. From there, all you need to do is run the Internet Explorer application, and this is the only step that you have to do.

From there, you should look for the option on the left hand side of the screen that says “Preferences”. In the “Preferences” section, you will find an icon that looks like a clock face; it’s labeled “network”.

When you click on this icon, you will find that the option on the left side of the screen labeled “Network Connections” is open. You need to click on it and then find the option that says “Open Network Stream”.

Next, you should click the “Stream” button next to “Netflix” and then click “Play”. After this, the software that you used will recognize the file type and start streaming Netflix to your computer.

The great thing about this NetFlix and Qwikster case study solution is that you don’t have to worry about changing anything. All that you need to do is click on the “Internet Explorer” icon and point it to where you want the file to be streamed to, and the software will do the rest.

Even though this is one of the simplest methods for streaming Netflix to your computer, it does work well. As long as you’re able to get the Internet Explorer program to work on your system, you should be able to use this NetFlix and Qwikster case study solution to help you stream Netflix to your computer.

If you do try this NetFlix and Qwikster case study solution, you’ll be happy with the results. Just remember that the best solution for streaming Netflix to your computer is a quality program called “NetFlix and Qwikster”.

Related Case Solutions:

LOOK FOR A FREE CASE STUDY SOLUTION