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).
