Tuesday, October 11, 2011

Hello Qwikster, It's New Coke; Welcome To the Dead Club

The idea may be sound, the execution is what killed it. Strategically, Netflix saw a changing business model and tried to get ahead of the curve. The customer wasn't ready to follow. It may have been the 60% price hike that ultimately done it in, but the idea was sound. At some point the DVD rental business will go away; just not today. And with such a negative attitude about Qwikster, the idea of selling it later to someone else lost its luster. The best thing you could do was simply kill it.

Coke also tried to stay ahead of tastes, seeing a need for their drink to be sweeter and more Pepsi-like. But the customer loyalty of the old brand mutinied when the brand changed too radically. Netflix customers did the exact same thing. And like New Coke, Qwikster is dead. Welcome to the dead brand club!

So was there any marketing lessons learned? 1. Perhaps for both Coke and Netflix, when things don't work, ask for a do-over. 2. The strategy may be sound, but so must be the execution. It is about the timing and sometimes pulling the bandage off too quick is not a good idea. 3. Responding in a timely matter is necessary. With Netflix, the response to the price increase alone should have been enough to reconsider announcing Qwikster. 4. Listen to the customer. Would the change be an improvement on how they used the brand? How does 2 separate services help the current Netflix customer to navigate, select, and use the service? It doesn't. 5. Doing nothing may be a possibility but doesn't move you or your brand forward. With every risk there is the possibility of failure. It is not the failure alone to worry about, but how one responds to it.

Content Distribution Windows Keep Shattering

Technological change has affected many industries. The iPod is noted for changing the music industry forever and cable has changed the face of TV syndication and the Movie Industry. The rise of multiple national cable networks means that the market to sell TV shows to multiple markets has gotten smaller; now shows are sold to one network like Comedy Central or TV Land for syndicated viewing. And along with cable on demand and streaming sites like Hulu, TV shows can be watched anytime not just outside prime time.

The movie industry has also seen its distribution windows drastically change. With DVD sales way down, distributors are seeking new revenue with premium pricing for same day as or even before theatrical release. Independent film companies have been pushing this plan. And now it is reaching the big budget film distributors. "Fallout in the exhibition industry continues over Universal Pictures’ controversial move to offer its upcoming Eddie Murphy-Ben Stiller comedy on premium video-on-demand just three weeks after it opens in theaters." Three weeks is hardly a window for theater owners and some are fighting back by not showing this film.

Will consumers pay a premium price to watch a first run film at home? It has not done well in past attempts. In addition consumers are seeing that the distribution windows have gotten much shorter. Where it once took a film more than a year to go from big screen to on demand, it now sometimes takes 3 months. And then shortly after it appears on a premium cable network like HBO or Starz. another 6 months and it lands on basic cable like fx or TNT. Consumers thirst for more seems to fill the pipeline with tons of films all passing through with lightening speed.

It is not just that the DVD has dies, it is that we as consumers are tired of the clutter of ownership. The iPod taught us that we can listen to what we want, when we want, where we want without filling up bookshelves with CDs. So too go the DVDs. How much the consumer will pay for the timeliness of the content is to be determined. Some may pay a premium price to watch in the home; most others will not. Theaters can't fight technological change, but they can make their experience a preferred one. Don't simply shut out the movie, but offer to make the experience a superior one.