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Case Study

Netflix (B): The 2011 fiasco (Cartoon case)

By Stefan Michel and Sarah Von Blumenthal

4 pages

April 2013

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Reference: IMD-3-2250

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.

Learning Objective

Discuss the motivation behind a highly successful industry leader’s radical change of business model and the ensuing failure of its strategy.

Keywords

Change Management, Brand Launch, Customer Relationship, Pricing, Marketing, General Management, Strategy

Settings

Northern America, United States of America
Netflix, Media
2011

Type

Published Sources

Available Languages

English

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This case study is part of a series

Netflix (A): Business model innovation (Cartoon case)
Netflix (B): The 2011 fiasco (Cartoon case)
Netflix (C): The race to videostreaming (Cartoon case)
Netflix (D): Streaming wars (Cartoon case)
Netflix (E): Capture value (Cartoon case)

This case study is part of a series

Netflix (A): Business model innovation (Cartoon case)
Netflix (B): The 2011 fiasco (Cartoon case)
Netflix (C): The race to videostreaming (Cartoon case)
Netflix (D): Streaming wars (Cartoon case)
Netflix (E): Capture value (Cartoon case)

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