Netflix split itself in two. 23 days later it took it back.
In September 2011 Netflix spun its DVD business off as Qwikster. 23 days later it reversed. It lost about 800,000 U.S. subscribers that quarter. Right direction, wrong pace.
Transcript
September 2011. Netflix is about to split itself in two. What would you have done?
Netflix had a profitable DVD-by-mail business and a streaming business it wanted to grow. Option one: spin the DVDs off into a separate brand, Qwikster, with its own site and its own login. Option two: keep both on one account, as before.
Reed Hastings chose the split, so the declining DVD business could wind down on its own track while streaming ran free. His reasoning: companies rarely die from moving too fast, and they frequently die from moving too slowly.
23 days later, Netflix canceled Qwikster. The DVDs stayed on netflix.com.
In the third quarter of 2011, Netflix lost about 800,000 U.S. subscribers, its first-ever domestic decline.
By late November, Netflix stock had fallen about 80%, to near $62.37.
The direction was right: Netflix shipped its last DVD in 2023. The pace was wrong. When you judge a recommendation, judge the what and the how separately.
The records behind this video
Every figure in the video comes from this Decision Record, each with its sources.
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