The Case for the Netflix Split

Netflix's announcement late last night that it would split into two separate companies has not been warmly received. As Megan McArdle put it, "The internet's collective reaction sits somewhere between foaming rage, and an enormous collective 'What the hey, Netflix?' " But at least one person thinks it's a smart business strategy. In an email to The Atlantic Tech, Columbia Business School professor Brett Gordon theorized that this may have been the right move:


As their streaming business continues to grow and will clearly outlast the DVD business, Netflix is trying to separate the two services into two brands. The Netflix brand name is strong, and they probably don't want that associated with the dying DVD business, hence the need to assign a separate brand name to legacy business. Separating the two from a consumer perspective will probably reduce customer confusion (e.g. through separate web sites each business will have a clear interface for customers) and perhaps allow them to tailor their pricing strategy for each business separately. Overall, this move demonstrates that Netflix is finally acknowledging that DVDs are slowly dying and they don't want the Netflix brand to be damaged by the inevitable death of physical digital goods.

Anyone convinced?

Presented by

Rebecca J. Rosen is a senior editor at The Atlantic, where she oversees the Business Channel. She was previously an associate editor at The Wilson Quarterly.

Never Tell People How Old They Look

Age discrimination affects us all. Who cares about youth? James Hamblin turns to his colleague Jeffrey Goldberg for advice.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Never Tell People How Old They Look

Age discrimination affects us all. James Hamblin turns to a colleague for advice.

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

Video

Pittsburgh: 'Better Than You Thought'

How Steel City became a bikeable, walkable paradise

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

More in Technology

Just In