Netflix (B): The 2011 fiasco (Cartoon case)
In July 2011, after its share price had reached an all-time high, Netflix announced its intention to split the company’s DVD rental and online movie streaming services by creating two separate businesses, Qwikster.com and Netflix.com. The change in its business model would entail an important price increase. Following angry protests from customers, including a negative Twitter stream, Netflix’s CEO and founder Reed Hastings sent subscribers a personalized e-mail of apology which only served to make matters worse. The case describes the events that took place between July and October 2011.
Discuss the motivation behind a highly successful industry leader’s radical change of business model and the ensuing failure of its strategy.
Netflix, Media
2011
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