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Netflix Creates Qwikster For DVD Only Business
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."
Wow, this is corporate stupidity at its finest. How exactly will this make more people subscribe? The only reason for this is that the CEO is freaked out about a stock drop and is overreacting. If anyone deserves to be fired it is the Netflix CEO. Everyone knows that the most powerful tool in business is brand recognition, and they are just throwing it away. From what I understand most of the people that dropped the DVD service did it because they weren't using it and it was just a good reason to do so. If anything this move will force more people to drop the DVD service as they will lose they que and no one will like having to pay 2 separate bills from same company. Way to go Netflix you just make a small problem much bigger by overreacting. I have a feeling that their stock is going to tank today.
This is just stupid, but the worst part is that, it seems to me like they didn't even think through all the implications of they way they are doing this. For example, take the following from the official netflix blog.
User asks: " If a film I search for on Netflix is not available for streaming, will the website still tell me if the DVD is available? Or must I search twice?"
CEO Reed Hastings responds: "ouch. You'd have to search the second place if we didn't have it in the first place."
Ouch? Are you serious? Ouch? To me, that reads like "hmmmm, we hadn't really thought about that".
So how about an article that documents the effect on us, the customers, not on speculators and investors?
Here, let me get that for you:
Crib notes: squeal, piggies, squeal.
If you were blocking sigs, you wouldn't have to read this.
Why of all things QWIKSTER? Why not MailFlix/NetFlix. Much more in line with the service capabilities.
Dear Reed:
I don't know you and this morning you send me an email telling me you messed up but yet I have never heard of you. I have a feeling you messed up again and didn't think this through. So now I'll need to have TWO accounts? Please reply when you know what you really want to do.
Signed
A new disgruntled customer.
God: When you do things right, people won't be sure you've done anything at all.
You're going to cheapen youself with a 'ster' name? Really?
And the misspelling of Quick as Qwik... this has all the telltale signs of a 50yo CEO listening to 30yo consultants about what a 15-20yo would find "hip" and "cool". The cringe factor of doing it at least ten years too late is overwhelming.
Live today, because you never know what tomorrow brings
One of the reasons I decided the price hikes were acceptable was that Its "month to month" in that I was going to be able to do the streaming only service, consume the new content there, than switch back to the DVD service for a couple months until they get new stuff available on streaming.
If this makes it hard to do that it further reduced the value to me and starts to make competitors like Amazon and Hulu+ look interesting. I still think Netflix is probably the better value proposition at the moment, even with the price hikes; but if this means I can't easily switch between one type of service and they other, I might have to start looking at other options for content again.
This is a dumb move, all around AFAICT. Its basically an accounting trick to make the EPS of Netflix proper look a little better, investors won't wont be fooled, customers like me will be aggravated.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
Here's the actual blog post from Netflix instead of the Techcrunch blogspam that quotes it:
http://blog.netflix.com/2011/09/explanation-and-some-reflections.html
So now when something in my queue is available on instant I won't be able to see that unless I specifically search a different site. (For an 100+ item queue, that's unreasonable).
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.
The right to protest the State is more sacred than the State.
Yeah, not too sure I like the name myself either.
Why not something similar to Netflix to make it easier to find?
Qwikflix sounds much better.
It's not stupid. It's NetFlix acknowledging that streaming is how people will watch content in the future. They are putting themselves 100% on the bleeding edge of all-streaming with no physical media. Now, there are a whole bunch of people that still want DVDs...and that's why they are still playing in that area at all. However, five years from now, when no one wants DVDs at all, they can just kill Quickster. Meanwhile, NetFlix becomes the dominant king of streaming content, as they can dedicate themselves 100% to that. It's not about innovating both business models anymore. It's about milking the DVD market as it dies while still allowing themselves to focus entirely on the streaming market, which is the future.
Missing from this submission is the news that Netflix/Qwikster will now offer game rentals. I suppose that's not a big deal to everyone. I'm sure gamefly isn't happy about it, but competition should be great right? Personally I rarely if ever rent games, since I tend to play a demo first (and if there isn't one, pirate) and if I like the game I purchase it through Steam, so that I can get up-to-date patches, play online, and have that warm fuzzy feeling of supporting the developers. I wish the industry was more receptive to demos, because they do work, for good games at least.
For example (an off-topic gaming story follows here), I recently watched X-Men: First Class and the American/Soviet ships primed for battle with each other put me in a Red Alert mood. I had never played the third game in the franchise, because when it came out I was raiding heavily in WoW and not playing anything else. Anyway, I went to check the price on Steam to find out if I had to get a pirated version as a sampler first, and to my surprise there was a free demo. The demo only offered two missions, but after spending an hour messing around with the various units in one mission I decided it was certainly worth the $20. Moral here is, game demos make sales, at least if the game is any good. But it seems to me like the industry simply expects you to rent the game if you want a sample, or else pay the full price, which is likely one of the driving forces of game piracy. Obviously the whole "free of charge" thing is a major draw for pirates, but I can imagine I'm not the only person who buys games, but won't waste $20-$50 until I'm certain it's something I will get several hours out of.
"To confine our attention to terrestrial matters would be to limit the human spirit." -Stephen Hawking
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.
Software Shouldn't Suck
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The worst part is that EVERY legit streaming service has weak selection, Netflix is just a little less weak than the competitors (although if they lose Starz content we'll have to see). The major studios have been pretty hostile to streaming (even the original outrageous $8/movie streaming sites) and really we only have it so good now thanks to some rather fancy footwork by Netflix in the early days before the studios really took notice of them.
The DVD-by-mail service is the only sure thing Netflix has. It costs them more, but they're not beholden to studio assholes with it. They just buy disks retail and stick them in envelopes. The streaming business model puts way too much power in the hands of the studios and lets them dick over any competitors at will.
I read the internet for the articles.
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.
You are falling for the fallacy that the CEO has a clue while in fact he is a complete moron.
A major rate hike is only done by a complete and utter moron. You do smaller less noticeable hikes over time where people do not notice it. They would not have lost HALF the people that left if Netflix's leadership had any clue at all on how to run a business.
Do not look at laser with remaining good eye.
Let me first begin by saying, let's have some foresight here fellow Slashdot readers. If the DVD business has been increasingly difficult for Netflix to maintain, and considering when they did change the price plans, most people dropped the DVD package but kept the instant video. Why would you try to push a market that is doomed to fail especially with the rise of instant media players for the TV and applications for phones/tablets?
I would bet they have enough subscribers on their own right now to push this idea... considering they already have. I like how you all are trying to criticize a CEO for his business strategy but I think you should let their business speak for it first.. I think this is a good idea and only time will tell, I'm sorry if you're hurt that you'll have to go to another website for your DVD shipping service, but in all honesty, the DVD is dying market. Why should I ship myself a DVD if I can buy a media streamer where I can also rent or buy movies? (waiting for every angry technologist to tell me I'm wrong. meanwhile, not realizing that they're the minority in the market... especially the minority that's smart enough to pirate something if it really wants it)
This is how I look at it... you may have to sign up with two different webpages to have them hit your credit card but in return it's cheaper than having the combined Netflix instant/dvd package. ALSO, you're getting the option to combine a gamefly like service with a movie rental service. And, as the CEO said in the article, they'll be able to focus on using their capital for more movie licenses for the people (majority) who use Netflix for their streaming services.
Having said all this, Quixster is still a lame name.