Successful Company Renaming Case Studies
There is debate among academics about whether changing a company's name is a beneficial strategy, with mixed results occurring in real life. However, the change of Justin.tv to Twitch and Clear Channel to iHeartRadio show that in some cases, a rename is exactly what a company needs to continue to grow.
JUSTIN.TV TO TWITCH
- Twitch is a livestreaming platform with a focus on video games.
- The platform was originally called Justin.tv when it was founded in 2007, but was rebranded in 2011.
- Justin.tv began as a 24/7 stream of founder Justin Kan's life, but soon spun off into a platform for other users to livestream their own lives and games as well.
- The new spin-off service became known as Twitch TV and, with Justin.tv, incorporated under the name Twitch Interactive in 2011.
- Twitch grew to 100 million monthly users by 2015 and to 15 million daily users by 2018. It currently outstrips mainstream channels like MSNBC and CNN in viewership.
- The platform currently has 2.2 million daily broadcasters.
- In 2014, Amazon acquired Twitch at a cost of $1 billion.
CLEAR CHANNEL TO IHEARTRADIO
- Clear Channel was a successful FM-radio empire, but in the new millennium, began losing ground to digital streaming services and music players.
- In response, the company launched iHeartRadio, its own digital streaming service.
- By 2014, iHeartRadio had become the dominant channel for Clear Channel, causing the company to rebrand itself under the iHeartRadio name.
- In the immediate wake of the rebranding, iHeartRadio achieved "70 percent consumer awareness" and grew its audience to 50 million registered users "faster than any digital music service," according to a 2014 press release.
- Currently, iHeartRadio has about $3.4 billion in revenue, 128 million registered users, and 250 million listeners on its FM stations.
- Early research in the US "suggests that there is little effect associated with a name change, except for a small sample of Dot Com companies."
- However, this earlier research may have been affected by being forced to focus on publicly-traded companies, which are required to publish their financials. A later study on insurance companies found a "significant and positive relation between name changes and subsequent growth in premiums."
- Changing from a more cumbersome name to a "short, easy to pronounce" name typically results in "higher breadth of ownership, greater share turnover, lower transaction price impacts, and higher valuation ratios."
Per the project criteria, we limited our initial research to academic sources. Due to the long publication cycles associated with academic works, in which a paper published a decade ago may still be cited as current, and due to the historical nature of this request, we have set aside our standard practice of only citing sources published within the past two years. Even expanding our research to these earlier sources, however, we were stymied by a lack of proper research material in the public domain. That is, the abstracts were available, but they lacked sufficient detail to complete this project. However, we did glean some salient insights which we have highlighted in a separate section above.
Therefore, we turned to other sources. Our initial round of research found that quite a few famous companies initially had a different name than the one they carry today. However, the vast majority changed their names in their very early days, which would make the impact of the name change nearly impossible to gauge. In many other cases (as, famously, RIM renaming itself after its signature product, Blackberry), the rename failed to turn the brand around.