New Coke and the death of Netflix, er, Qwikster

Submitted by acohill on Thu, 09/22/2011 - 09:06

Executives at Coca-Cola headquarters in Atlanta are probably breaking out the bubbly (2 liter bottles of Coke) and toasting themselves. No longer will the New Coke be considered the dumbest, most asinine product roll out in history. Netflix will now be a source of business case studies in MBA programs for the foreseeable future.

Not only did Netflix hike prices dramatically without warning customers or explaining their rationale in any, um, rational way. To "fix" the problem they created with the price hikes, the president of Netflix, Reed Hastings, wrote the most condescending letter in the history of commerce, managing simultaneously to look stupid, imply that his customers are stupid, AND make the problem much much worse by splitting Netflix in half and creating two completely separate services (Netflix for streaming, Qwikster for DVDs through the mail).

The split of Netflix into two completely separate companies requires customers to now have two bills, maintain two accounts, and completely destroys one of the best things about Netflix--the ability to browse the entire Netflix TV and movie catalogue and effortlessly move titles back and forth between your streaming queue and your DVD queue.

But I say, "Good for Netflix." Netflix has been the 800 pound gorilla in the living room of video on demand, and they just shot themselves, not in the foot, but in the head. Customers are already fleeing for the exits, and new video companies suddenly have marketplace opportunities that did not exist two weeks ago. Competition is a wonderful thing. We will all benefit with better service options, better pricing options, and more choice.