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.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

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

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

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

More in Technology

Just In