The highly controversial decision by Netflix in which customers have to manage two separate accounts and pay separably for streaming movies and physical DVDs ended today.
Qwikster will be abandoned by Netflix and they will go back to their original service, delivering both types of movie watching under one price. This was a failed strategy by Netflix, they shouldn’t have done this in the first place. If they had considered the basic principles of economics they should have known that people consider at the margin. Consumers will not appreciate the new and pricier service provided. As we have talked in class, this experiment by Netflix ended in a failure, and clearly they did not earn any profit. Their opportunity cost was too high, to sacrifice their loyal customers for a few more dollars on the new ones. A new long term strategy is a double edged sword, if implemented correctly a business could flourish, but wrongly the exact opposite will happen. Netflix implemented the wrong strategy at the wrong time, and it costed them greatly.
Good thing they were able to recover quickly, or else they would have ended up like Blockbuster – down the drain.