Netflix Creates Qwikster For DVD Only Business 481
Frankie70 writes "Netflix CEO Reed Hastings just dropped a bombshell. In the wake of a rapid decline in Netflix's stock price last week, Hastings is taking a bold step by separating the DVD and video streaming services. The DVD-by-mail service will now be called Qwikster, and the streaming service will maintain the Netflix brand."
Way to make the problem worse (Score:5, Interesting)
Apology??? (Score:2, Interesting)
"Sorry we screwed you over, so in response we'll make things extremely inconvenient."
Dollar vote people, dollar vote.
Great... (Score:5, Interesting)
Now when I'm looking for something to watch, I'll have to check Netflix first, then Qwikster.
I can't even see this as sensible business plan. The world is moving to streaming, so Netflix is going to create a new company that ships old discs? Do they really expect this business will still be growing in 5 years?
Before Netflix split the plans, I had assumed that Netflix would slowly raised prices on the DVD-by-mail service before finally killing it. In the meantime they would work on expanding their content, and lobbying Congress to make it as easy to broadcast video as it is for radio stations to broadcast music (no individual negotiations, just a single company to make payments to).
Instead, their streaming library is shrinking and they're cutting away the DVD business that makes up for it. I think Reed has drank a little too much of the Kool-Aid. He starts out his post talking about how well Netflix works on TVs. Yes, Reed, the software is great, but the selection is terrible. As an addition to the DVD service, it was great and promising, but it's not ready to be its own general market product yet.
Re:What an unfortunate name... (Score:4, Interesting)
Glad I'm not the only one that thought that.
Naming your company something that sounds like a failed Amway rebranding: FAIL #1.
Not checking to see who was using that brand name as a twitter ID: FAIL #2.
I'm guessing that the CFO recommended spinning off the DVD business ASAP before it bled the entire company dry. I give it 9-12 months.
Embracing the disruption (Score:4, Interesting)
So we here in the Slashdot crowd are the first ones to laugh at businesses that fail to stay ahead of the technology curve. AOL and their endless CDs, RIM getting destroyed by iPhones and Android phones, Yahoo's failure to recognize that Google's advantage comes from more than just its search algorithms, et al. A common theme through all of these dramatic implosions is that the old business model strangled the new, and that the leadership of these companies was unwilling to take the short-term pain hit to prepare for the future. Yet Netflix is doing just that, and they meet with even more derision because it's going to screw up the existing customer base.
Do any of us believe that DVDs via USPS are the future of content delivery? Of course not. Could Netflix have spun it a little better? Sure, but there's a whole set of reasons that moving away from your established business model is considered painful, and one of those is that it's going to piss off the established base and cost you some lost business. A little more artistry in the transition would have been nice, but anyone who thinks that this move is going to kill off Netflix is probably mistaken. They are being remarkably honest about it all.
The DVD business is dying fast, and they know it. Direct content delivery is the growth industry that is disrupting DVDs (and eventually CDs, games, and packaged software) out of existence, and they're jumping to the new ship before the old one is sunk.
Re:Did not even thinke this through? (Score:5, Interesting)
I have been a member for about 6 years. My price has been going up slowly over that time for various reasons, but the recent jump due to streaming forced me to re-evaluate my monthly bill. To my surprise if I dropped streaming and blu-ray my monthly bill would almost be the same as when I first started (back before streaming or blu-ray).
That lead me to believe that their pricing has just been changed to reflect the cost of streaming, they took the initial approach of giving it away for free and now feel they have enough of a user base to start building a business. I can understand they are business and need to charge for the service they provide. So I reduced by DVD plan and kept the streaming plan so there was no monthly impact for me.
However, moving to two independent services is entirely different. As the email from the CEO stated by doing this they are breaking the integration between the DVD and Streaming services. As you stated it is now necessarily to manage both separately, meaning duplicated effort on two different websites. Not only does that waste the customers time it provides less incentive to use both systems. Integration is often what separates a good system from a great system, and that applies to many things we use in daily life and Netflix is no exception.
I can't believe that the Netflix team doesn't understand the value of integration, as much of their past work involved integrating both Steaming and DVD on the current website. I also know that the CEOs long term goal has always been online delivery (hence the name), so maybe this is that first step. But it sure doesn't feel like a step in the right direction, perhaps because the primary differentiator between Netflix and everyone else was the option for both streaming AND physical media in one service.