Print 79 comment(s) - last by Hieyeck.. on Sep 21 at 8:22 AM

Netflix splits its streaming, DVD businesses; Qwikster to add video game rentals

It's been a rough few months for Netflix. The company saw massive backlash when it decided to raise the prices of streaming + DVD plans. Netflix was once again in the hot seat when Starz decided not to renew its distribution deal, which means that streaming customers will lose out on Disney and Sony content when the current deal expires in February 2012.

Netflix knows that it has a PR nightmare on its hands, and CEO Reed Hasting apologized for the debacle in a blog post Sunday night:

I messed up. I owe everyone an explanation.

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology...

I want to acknowledge and thank our many members that stuck with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly. 

Now, Netflix is making yet another change that is sure to ruffle a few feathers. Hastings announced this that Netflix will spin-off its DVD-only business into a new company called Qwikster

"So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently," said Hastings. "We chose the name Qwikster because it refers to quick delivery."

Qwikster will be headed by current Netflix DVD guru Andy Rendich.

The streaming service will still be called Netflix and both will be completely independent. That means that you will need a separate account for each, you will be billed separately for each, and reviews written for one Netflix content will not show up on Qwikster (and vice-versa). Likewise, Netflix pricing will remain the same at $7.99 for its streaming-only plan. Qwikster will retain the current DVD-only pricing of $8.99 for a single DVD out at a time, $11.99 for two DVDs and so forth.

This change will allow both companies to focus on their strengths, but it makes management on the customer's end even more complex. 

"Some members will likely feel that we shouldn’t split the businesses, and that we shouldn’t rename our DVD by mail service," Hastings added. "Our view is with this split of the businesses, we will be better at streaming, and we will be better at DVD by mail."

If there is one positive to come out of the deal, Qwikster will now have the option to rent Wii, PS3, and Xbox 360 games for an additional fee (similar to the way Blu-ray movies are handled currently).

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

Multiple streams...
By kb9fcc on 9/19/2011 10:49:55 AM , Rating: 4
So, all that smoke last week about only getting access to multiple streams was to have either have a multi-DVD package or pay for additional streaming accounts becomes moot. Now with two "completely independent" companies if you want multiple streams get ready to cough up an extra $7.99 each, period.

For those claiming how expensive it is to stream, really? Billions? Are these numbers coming from the source that the motion picture industry quotes the bogo-billions that piracy is costing them? Right. It's greed, pure and simple. Hollywood has finally noticed Netflix came up with a successful business model, and they want their cut, NOW, and Netflix seems to be caught in the cross-hairs. (Is Redbox next?)

I'm done with Netflix/Qwikster. The price increases were bad enough, but it's obvious now, by the CEO's own admission, that the company is mismanaged. It's one thing to restructure or raise prices, etc., it happens. But this "lack of communication" of one unpopular change after another dribbling out over weeks at a time, some of which contradict what just transpired, is a clear sign that management at Netflix has lost it's way and has no clue how to successfully run the company anymore. It would be comical if I didn't use and actually (used to) like the service they provided.

"People Don't Respect Confidentiality in This Industry" -- Sony Computer Entertainment of America President and CEO Jack Tretton

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki