Netflix's mistake

As I posted yesterday, I think Netflix has made the right decision. The strategies that the DVD-by-mail business employs are different to that which the online business employs. Their mistake, however is in how they executed the split.

The target market for the two businesses are not too dissimilar. Consequently the consumer does not understand. They feel a bundle that was previously provided to them - a bundle that made sense - no longer makes sense.

Analogies to the situation might include:
  • Newspapers claiming they could no longer deliver to your door - that they could only be purchased by visiting a shop. 
  • Apple closing its Apple stores to concentrate on selling their devices through their Internet site.
  • Starbucks splitting their business into one that serves only coffee and another that only serves cakes and other assortments.
To Netflix's target customers, it hurts. There are probably more effective ways in which they could have split the channels than how they have done so.