Netflix split its DVD service into Qwikster and lost 800,000 subscribers in a quarter

In July 2011, Netflix raised prices by roughly 60% for customers who wanted both DVD-by-mail and streaming, effectively unbundling the two services. In September, CEO Reed Hastings announced that the DVD business would be spun off into a separate company called Qwikster, requiring customers to use two websites and two accounts.

Customers reacted with fury. Many saw the move as a price hike dressed up as a strategic split, and the Qwikster name became a symbol of corporate arrogance. Netflix lost 800,000 U.S. subscribers in the third quarter of 2011, and its stock fell roughly 77% between July and December.

Within weeks, Hastings reversed the Qwikster decision, admitting in a blog post that he had 'slid into arrogance.' The DVD business stayed inside Netflix, but the price increase remained. The episode became one of the most cited examples of a company misreading its own customers.

Netflix eventually recovered and grew into a streaming giant, but the Qwikster reversal is still taught as a warning about combining a price increase with a confusing rebrand and poor communication.

Netflix announced a 60% price hike and a Qwikster rebrand together, costing 800,000 subscribers and 77% of its share price before reversing in 23 days.

Netflix tried to separate two services that customers saw as one product, without explaining the benefit to them.

A large price increase and a new brand name arrived together, making both look worse.

The Qwikster announcement was made by blog post, with little customer research or advance communication.

Management assumed subscribers would accept the strategic logic and underestimated emotional attachment to the existing service.

Qwikster was announced and killed inside 23 days — the reversal was faster than the rollout, which is what a decision reversed by its own customers looks like

A price change and a rebrand should rarely land at the same time. If you are asking customers to pay more, do not also ask them to learn a new name and a new workflow.

Netflix killed Qwikster within weeks and kept DVDs under the Netflix name. The company later recovered and dominated streaming, but the 2011 episode remains a standard case study in pricing, rebranding and customer communication.