It has been a few weeks but our old pal Josh Siefert, senior marketing strategist at Brooklyn-based, IPG-owned digital shop HUGE, has returned. After defending his fondness for McGarryBowen’s BK work, Josh is shifting gears and lamenting the loss of Netflix’s short-lived Qwikster concept, which disappeared faster than Snow’s rap career. Take it away, mon frer.
Netflix’s recent gaffes should remind those of us thinking about digital experiences that managing products and brands are very different exercises. While companies like Google and Facebook are managing their identities in broader terms than their services, Netflix’s Qwiskter debacle reflects a company without a brand halo extending beyond its service. Though one of my favorite digital brands—and a frequently cited example of an excellent digital experience—Netflix has been taking everyone for a ride. While many folks may have been unfazed by the initial price hike that sent a huge number of customers off-the-rails, that loyal set almost certainly felt betrayed to learn that their relationship with Netflix was to be ripped in two.
Worse still, we were left imagining a new relationship with bizarrely named “Qwikster” with no identity at all. How could a company that year after year had continued to craft a better service suddenly do a 180 making its business challenge of online streaming v. DVD mailing everyone else’s problem to sort through as customers of two companies? Surely this was misguided.
Once over the initial shock as a Netflix fan, the move struck me as actually quite smart. Streaming and DVDs are quite different businesses, and allowing each to focus and innovate on their own may well have created better experiences for each service. Moreover, separating the two would reduce the risk that the massive income from Netflix’s successful—but ultimately certain to decline—DVD by mail business would strangle innovation within the future of Netflix streaming. As the cost to license top quality streaming content has skyrocketed into multi-billion dollar deals, and as more and more content gets streamed generally, the future of the long-term model of Netflix may well look more like a media company and less like a content distribution network. More HBO, less Blockbuster.
Qwikster was a long-range view that traded-in existing Netflix brand equity for a better future business position. It was doomed from the start, not because of the cost, its difficult-to-spell name, or because someone already had the Twitter handle, but because it was communicated so ineffectively and in a reactionary fashion. While nobody likes to suddenly pay more for something, they absolutely do not tolerate being insulted by patently false assertions. Rather than work to fix its initial communication problem, Netflix doubled down on its position by announcing Qwikster. This move alienated not only customers irked by the price rise, but everyone else as well.
The Qwikster move and price increase was always going to anger at least some customers, giving up current brand equity. However, with great brand communication, the price paid by Netflix didn’t have to be unacceptably high. The majority of the most valuable brands today—folks like IBM, McDonalds, Coca-Cola, Walmart, Nike, Toyota—have spent decades cultivating and managing not only their products and services, but also their images. While companies like Coca-Cola and McDonalds have spent fortunes differentiating themselves with brand advertising, newer players like Google and Facebook have relied little on brand advertising, instead growing their brands through superior products and services that have delighted millions of people.
Netflix is just such a digital company that has garnered fanatical support from millions of people. Though Netflix has advertised heavily to acquire customers, the foundation of the Netflix brand turned out to rely almost entirely on customer satisfaction in its service. As such, the price hike and subsequent Qwikster announcement effectively gutted not only existing confidence and loyalty, but also future perception of the service, suddenly turning Netflix from a beloved brand into a wayward, struggling company.
In digital, where successful brands like Facebook and Google can grow with astounding speed as reflections of superior products and services, Netflix reminds us that managing a great digital product is necessary but not sufficient to building a most successful digital brand. While most great brands start as superior products and services whatever the industry, at some point the brand becomes the product. When this happens, failing to manage the brand with the same fanaticism that customers have bestowed upon the product creates a situation inviting implosion, as Netflix seems to be experiencing.