The main topics in class 6 were brand positioning and value proposition. In that class we
discussed Netflix’s decision to split up their service into Netflix (the streaming portion of their video service) and Qwikster (the DVD by mail portion of their service) and charge $8 a month for one service or $16 a month for both services. Today they chose to reverse that decision and keep both services together. After the release of this decision, Netflix’s stock rose after having lost almost two thirds in the past 3 months.
When I initially heard about this split in class I thought it would be a good idea because of the extra revenue it would generate from the people that would buy both services considering how much cheaper it is than renting video’s from a video rental store. However, after reading the article I learnt that by splitting up the services, people who want both services would have a separate bill for each, which is a major turnoff for consumers. The decision is a quick fix because they never actually separated the services, so no new infrastructure was ever created.
See Article: http://mediadecoder.blogs.nytimes.com/2011/10/10/netflix-abandons-plan-to-rent-dvds-on-qwikster/?ref=business