Qwikie Separation

After the class discussion on the division of Netflix into two companies, I still felt the need for the juicy details of the separation. I could not fathom a good enough reason to entice Netflix to create Qwikster, forcing customers to pay double for both streaming and DVD borrowing. At first glance the decision appears to only be hurting the already failed marriage between Mr. Qwikster and Ms. Netflix. The stock has fallen 56% over a span of two months.  More than 1 million customers left both services simultaneously. The expected subscriber growth rate is diminishing. Yet these outcomes could have easily been predicted and probably were. Was breaking up the right thing to do? Many analysts point out the advantage of selling off Qwikster once provided with a profitable gain. However, it is quite obvious to consumers that the DVD business is dying a painful death as displayed by the Blockbuster demise. Then there is the idea of innovation. “When it comes to innovation, scale and breadth of offering often lose out to focus.” The splitting of Netflix can bring opportunities for the company to focus solely on the one purpose of the company whether it is streaming or mail, and inputting all resources towards the product. Although only the future can tell if the decision is right, for the time being the reasons are clear.

Berman, D. (2011, September 20).Making sense of netflix, or not. Retrieved from http://www.theglobeandmail.com/globe-investor/markets/markets-blog/making-sense-of-netflix-or-not/article2172703/

Kelley, B. (2011, September 19).Netflux – a qwikster innovation divorce for netflix. Retrieved from http://www.innovationexcellence.com/blog/2011/09/19/netflux-a-qwikster-innovation-divorce-for-netflix/