Here you thought Netflix (NFLX) just had trouble by splitting off its DVD operations into the Qwikster brand and ticking off a lot of customers in the process. Nope. Even with CEO Reed Hastings apologizing -- kind of -- there are worse things possible.
And, according to a quick survey done of 500 consumers by brand naming company Strategic Name Development, Netflix may have stepped into one of the worst muck holes it could have: blowing the name of its DVD division. And the reason it did was fear.
Did Homer Simpson pick that name?
Some people had already noted the notable business failures that ended in -ster, like Friendster, Flickster, and Dogster. Napster was the poster child for the "ster effect," as it went bankrupt. The name only survives today because Best Buy eventually bought it.
But forget the Curse of the Ster for a moment. Strategic Name interviewed a panel of 500 people with an age and gender balance that it said reflected Netflix users. The company asked them to choose answers to two questions:
- What would the Qwikster name be ideal for?
- What does the name convey?
Are you sure mail delivery is qwik?
Here's the table of responses for what people thought the Qwikster name would be ideal for (click to enlarge):
The scariest single finding is that 57 percent of the respondents thought Qwikster represented a service faster than any other. Yup, Netflix just equated delivery through the mail with the concept of speed, compared to downloading video. And the 19 percent that thought it was idea for a product mailed to consumers were likely influenced by all the press that Netflix received.
Here are some interview quotes that Strategic Name said were representative:
"Qwikster is a name that doesn't convey anything about the product or service -- especially since the mail system is so slow.""What does Qwikster have to do with snail mail?"Which one of the "sters" are you again?
"I would not relate the name to a DVD mail service."
Only slightly more reassuring were the associations with the name Qwikster (click to enlarge):
Only a tad over a third thought that the name was easily confused with similar names. It could have been worse. But some of the representative comments would have been useful for Netflix to hear before it made the naming decision:
"They should have kept Netlix for DVDs and made up something else for the streaming option.""I don't see the relationship there. They should have Flix in the name: Mailflix, Dvdflix."Netflix blinked
"Netflix is such a well"known name and much more specific to movies. Qwikster is so generic it could be anything and has no chance of becoming a household name."
The problem Netflix faced was that its brand equity existed in the current name. Management wanted to preserve that going forward, even if, as seems likely, it plans to spin off or sell the DVD business.
Making the decision to split the company was the right thing to do. Management wanted to avoid the Innovator's Dilemma, in which a company shirks away from new technology because it needs to protect its better-paying legacy business. That decision took courage. But heart faltered when it came to the name.
By associating Qwikster with the DVD business, top brass made the complete opposite choice of what they needed. The company could have brought on new name (preferably something with a more natural connection to the service that avoided the infamous suffix) and associated it with the streaming service. Netflix would have used the classic approach of promoting new name with the established one and then, over time, switched the emphasis.
Eventually, the new name would have alone and been associated with streaming. Management then could have renamed the entire company under the new brand, with the existing Netflix brand equity adding significantly to the value it could get from a sale of the DVD service. But, that didn't happen and now it probably can't. Chalk it up to a group of executives who thought they knew best, but chickened out at the last minute when it most counted.
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