Netflix Kills Qwikster

gclef writes "Netflix has apparently decided that spinning off their DVD business into a separate organization was a bad idea after all, and is killing off the 'Qwikster' concept. From the article: 'Less than a month ago, the Netflix said it would split the DVD rental business off on a new website, to be called Qwikster. Subscribers howled at the move, saying they saw Netflix as a destination for movies in general and didn’t want to manage two accounts. “It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs,” CEO Reed Hastings said in the blog post.'"

Comments

Too little, too late

[g051051]

It's obvious that NetFlix doesn't understand its customers anymore (if it ever did.) What I used to take as excellent customer focused strategy now seems to have been completely accidental. Every customer facing change they've made over the past few years has made the NetFlix experience progressively worse. At this point, I've had enough of their confused thrashing, and will still be cancelling my subscription. I checked my records, I joined NetFlix in 2004, and used to have a 3 DVD plan, but inf recent years have dropped to 1 DVD, then no DVDs, and now, no NetFlix.

Re:Too little, too late

[eepok]

I don't think it's too little nor too late. This is two major decisions that they've turned around and admitted that they didn't appropriately measure their audience correctly-- BEFORE implementation. How many companies do you know that do that?

Their actions were affected by their audience... do we have expectations above and beyond that?

Re:Too little, too late

[Anonymous Coward]

Their actions were affected by their tumbling stock price and customer mass exodus.

Re:Too little, too late

[Anonymous Coward]

Mod this up... this action was to appease the stock holders, and nothing to do with the "feedback" from the customer base.

Re:Too little, too late

[taxman_10m]

I was a few weeks away from cancelling. The Qwikster thing spurred me to explore other options and question how and in what way I spend my entertainment dollars. Let's face it, once you begin to give a good hard look at entertainment spending it is easy to come to the conclusion that you don't need much of it. My Netflix instant and dvd queue is about 90% 3-star movies, things that I'd add but put off to watch other better things. But now I've watch all those other things. Yes, Netflix did add some new content recently, but they also took away some content as I found out when I went to watch The Sting (5-stars) on Instant. Now that the summer is over, network TV is back. That's free OTA, and you can catch eps for free on Hulu.

I suppose I'll refrain from cancelling now, but I don't have much confidence in Netflix's future. They seem schizophrenic at the moment.

Re:Too little, too late

[ShakaUVM]

>>At this point, I've had enough of their confused thrashing, and will still be cancelling my subscription.

So they listened to their customers, abandoning the fucktarded Netflix/Qwkster split idea (though Qwkster would have made for a great Scrabble triple word score once it became genericized), and... you're cancelling over that?

I'm actually debating cancelling my cable TV. I never watch it, and only bought it to entertain my wife for when I'm playing video games. But now she spends all night watching Dr. Who and TNG episodes on Netflix, and hasn't turned on the cable box in over a month.

Re:Too little, too late

[SlippyToad]

I'm already there. I could not justify $130 a month for 500 channels of mindless puree. And I'm still not sure how we got to paying for commercials. One thing maybe these fuckwits could take note of is that customers pay for TV to get away from the goddamn commerical interruptons. I am sticking with Netflix because I tried Hulu as an alternative, and the every-10-minutes commercial interruption (which was in no way "limited" at all) was enough of a nuisance that I decided I refuse to pay $8/mo for some fucking bullshit to be bleated in my ear while I'm trying to relax.

Re:Too little, too late

[MBCook]

I'm quite happy they changed it, I was planning on quitting Netflix when this was implemented. That said, this one action (which never even happened) immediately trashed all 7+ years of good will I had with them. In August, they were one of my favorite companies. Now I don't trust them.

Irony of all this? I didn't mind the price increase. It wasn't bad for me. I thought they $8 DVD + Streaming plan was very underpriced, so I wasn't surprised at that move.

Re:Too little, too late

[Anonymous Coward]

The worrying thing here is that the objections people had were sufficiently obvious that they should have been brought up in the first planning meeting (the added hassle of using 2 accounts for what used to require 1, is so trivial even a marketing zombie should see it). I for one had assumed that they were aware people would be annoyed by having to maintain two accounts, and that they determined for strategic reasons that the gains outweighed the potential losses. The fact that they reversed the decision so quickly indicates that they didn't fully understand the consequences of the choice. That indicates bad leadership.

I expect to see Netflix die a death of a thousand cuts.

Re:Too little, too late

[taxman_10m]

The way I feel right now they seem to do something every few months to try to get more money from me. I don't enjoy having to watch like a hawk for term changes. Don't like it when my bank does it, don't like it when Netflix does it. Paying for the year to get Amazon is attractive to me because I get to pay for the year with the full understanding that I know exactly what I get. Although not attractive enough to switch from Netflix, at this time...

Re:Too little, too late

[schnikies79]

So what? That is a quick way to get your message to a company, and it worked.

Re:Too little, too late

[tripleevenfall]

Personally, I'm amazed the CEO still has a job after this dumbassery has reduced the stock price by half in only a couple of months.

I will repeat my assessment of Netflix. It's a company that had a good idea once, and hasn't had a good one since.

Re:Too little, too late

[na1led]

I don't care about the DVDs, infact I think they should ditch DVDs altogether and just provide better streaming content!

Re:Too little, too late

[knight24k]

It's obvious that NetFlix doesn't understand its customers anymore (if it ever did.) What I used to take as excellent customer focused strategy now seems to have been completely accidental. Every customer facing change they've made over the past few years has made the NetFlix experience progressively worse. At this point, I've had enough of their confused thrashing, and will still be cancelling my subscription. I checked my records, I joined NetFlix in 2004, and used to have a 3 DVD plan, but inf recent years have dropped to 1 DVD, then no DVDs, and now, no NetFlix.

Same here, the last announcement caused me to cancel that day and made me take another look at Blockbuster. After the price jump I had to drop down to 2 DVDs. With BB I'm back to 3 and get Blu-ray and games for no extra charge. Granted, Netflix has the most amazing search and recommendation system around, but I can't justify staying with them for that and frankly I don't trust them anymore. If that insane CEO leaves I *may* try them again, but as long as that idiot is leading things I am staying away.

Re:Too little, too late

[luckymutt]

How many companies do you know that do that?

I think any company would reverse it's position if they lost 60% of their stock's value within 3 days of making the announcement.
Don't think they are just doing this because of a few comments from their users on their blog post. They are doing this because their shareholders just lost a bunch.

Re:Too little, too late

[amiga3D]

Not true. The feedback from the customers is what hit the stock price and angered the stock holders. So yes it was due to customer feedback.

Re:Too little, too late

[rgbatduke]

Is there a difference? Acting on negative feedback from a customer base is "appeasing" the stock holders, unless the stockholders are eager to lose their investment.

If only they were as responsive in the two other areas where they get negative feedback -- from me, at least:

* Lack of a (proprietary or not) functional linux client.
* Lack of clear progress towards making the DVD rental business moot by putting all of their movies up for streaming viewing.

The one I fully understand is a dicey proposition to them, however technically simple it is. All of those copyright owners get nervous about movies playing on a system without ironclad DRM. Unfortunately they don't understand that there is no such thing as an "ironclad" movie player on any system wherein the DRM cannot easily be circumvented by anyone that really wants to, and that China is a land filled with "entrepreneurs" who both want to and long, long since have. Great job of locking a barn door that cannot, really, be locked, a door in a two dimensional false front, a "hollywood wall" straight out of Blazing Saddles, the kind anybody can just walk around.

In the meantime, they are shooting themselves in the head as far as the derivable revenue stream that they might expect from the thousands of long-tail movies out there is concerned. There are thousands of old TV shows and movies I would be happy to watch, but not if I have to mess with DVD shipping even as easy as they have made it. It is a PITA and wasteful and expensive and requires that I decide today what I want to watch three days from now, if I have time to watch anything at all.

I'd be willing to pay more to Netflix if they simply got everything online. It's easily worth it to me to pay a nickel or a dime for every hour I view over a month to NOT have to wait for shipping, not NOT have to try to crack and store all of the movies and shows in existence and to have a halfway decent interface to them on both my computers and my TV. If they simply shared this revenue with the movies' distributors, it would spin straw into gold, easily matching their revenue from the handful of DVDs Netflix has to maintain for the older/slower titles.

It ain't happen', of course. It makes too much sense, so even appealing to greed won't help. One could only wish that they would listen to their customers even more than they do, and thereby make their shareholders even happier than they are.

rgb

Re:Too little, too late

[Anonymous Coward]

The stock was overvalued at $300. It's undervalued now, but a significant fall in price was inevitable.

Re:Too little, too late

[Anonymous Coward]

Uhhhmmm...does your wife have a like-minded sister?? Just askin...

Re:Too little, too late

[Anonymous Coward]

Yes, there is a huge difference. You can do what you think is right, even if there is short term pain, and move forward. Or you can knee-jerk react to the board and stock holders.

Re:Too little, too late

[Sancho]

Crazy prices. I have cable internet service, as it's the best option around here. Bundling basic cable with HD comes out to right about $10/mo. If I didn't have cable internet service, it would be considerably more, of course.

500 channels? How many do you watch at once? How many do you watch ever?

Re:Too little, too late

[Anonymous Coward]

Well, netflix is still the best way to stream movies and TV (for me at least). But I have been looking into other ways recently... Mildly excited about Microsofts plan to start streaming TV through the Xbox (That might give Netflix a real run for it's money). But for movies, the choices are more limited - I mean, I either pay $8/month to stream whatever I want or $3/movie to stream. And Netflix's charge is a lot lower than what I would get if I rented movies individually...

Re:Too little, too late

[bryan1945]

Every time they have changed something, they send me an email way in advance. Like the new pricing structure. Plenty of time for me to change.

Re:Too little, too late

[hairyfeet]

You aren't the only one. While I myself haven't time to watch movies several of my customers had Netflix and down to the last one after this last BS they switched to either Redbox or Hulu Plus or a combination of the two.

The big selling point for my customers was streaming for the kiddies while having the DVDs in the mail for the adults (because they never seem to have what they'd want to watch in the streaming section, I heard that complaint a lot) and after this last dumbshit move many came to me to find out alternatives because they simply got fed up. Now the majority have Nbox media players with 200-400gb HDDs attached which I showed them how to easily pick up cheap kids movies off of Amazon and rip them to their kids Nboxes, while they either have Amazon movies loaded to their HTPCs for themselves or Redbox for their movies.

So I have to agree that somebody there doesn't know what the fuck they are doing, and certainly don't know their customers. This last round of BS along with the price jacking really ran off many of my customers with kids and that seemed like the biggest market they had. I don't know how many parents I had before this BS had me build nice little HTPCs because they had loved Netflix so much they wanted an easy and nice way to put it in their living rooms, now it is all Hulu plus and Redbox and Amazon FTW.

Re:Too little, too late

[yodleboy]

The one thing I hate is that much of the content on Netflix streaming expires (sometimes really fast...all James Bond movies for just 2 weeks?), and while it will usually appear again, it may take up to a year. I've been streaming since they first offered it and there have definitely been times when my queue has been devoid of anything i actually want to watch. Too be honest, we hardly use it for movies anymore, it's mostly TV shows, sometimes you just want to throw up a Mythbusters or TNG episode while you work on dinner or read a book. When all that has rolled off, having the cable/dish can fill the gap.

Re:Too little, too late

[g051051]

Hulu Plus doesn't work for me. I can't stand the idea of paying for commercials, and their policies on availability drive me nuts. We looked at Hulu Plus to get access to the previous season of Castle, but as soon as the new season premiered, they yanked it. Seems pretty incomprehensible that they'd restrict the ability to catch up on a program like that. I'd think that people just jumping in to a new season would be most inclined to get caught up on previous seasons, but they make that impossible.

Re:Too little, too late

[Wolfrider]

--Absolutely. I called their helpline and said Thank you. ;-) The whole reason I signed up for their service in the 1st place, was from a Slashdot article that said they had made a conscious decision to keep their customer service in the US instead of outsourcing.

1-866-716-0414 - Let them know they did the right thing by listening to their customers!

Re:Too little, too late

[Belial6]

Anyone that had you build an HTPC specifically for Netflix was making a VERY poor choice. Roku boxes cast from $60-$100 and will add further ongoing savings through lower power usage. HTPCs are great for those of us with local libraries of media, and those that want to play PC games on their TVs. If you already have an HTPC for one of the other uses, running Netflix on it can make sense, but it is a poor choice for Netflix only.

Re:Too little, too late

[hexagonc]

.. sometimes you just want to throw up a Mythbusters or TNG episode while you work on dinner or read a book...

You can watch TV while reading a book?

Re:Too little, too late

[yodleboy]

well if it's something like mythbusters you can basically watch 1 minute in 5 and be pretty well on top of things. lol

Re:Too little, too late

[hairyfeet]

Actually I'd say it is a VERY GOOD choice, and here is why: Future proofing. How many bought Google TV only to have the media yanked out from under them? What will Roku do if the media companies do the same to them?

The nice thing about an HTPC (which if you go with the new AMD boards are quite cheap, just look up how little you can get a good barebone kit or Brazos unit for) is that if it is on the net you can watch it because unlike with those other units there is NO way to single them out as they ARE PCs, they are just hooked to an HDTV.

Now like I said for the kiddie rooms we went Nbox, as I've had nothing but great luck with those. Built like tanks, never overheat, take major abuse, have easy push buttons on front your average 4 year old can work, just a great little unit. But by building a nice affordable HTPC they not only have an easy way to watch ALL of the Netflix/Hulu content PLUS all the Windows 7 MC Internet TV content, They ALSO have a one stop....media server, jukebox, entertainment center, games machine, web surfer...it really does have a hell of a lot more uses than just hulu or netflix. My customers are now simply ripping their DVDs to their 1Tb+ HDDs so that WMC has all their content on demand, one click and you're good to go.

Between the HTPC and the Nbox for the kiddies my customers can watch a disc one time, rip it, then put it in the closest so they never have to worry about it again AND still have all the Internet content as well. I can tell you I've never had a single complaint from this setup, on the contrary I've had people that only had little netboxes like the WD (which I'm assuming the Roku is like, haven't messed with them) come to me to have their own HTPC built because you have so much more content and so many other things you can do with them. I doubt anyone would be playing Batman:AA on a Roku which is what my customer that bought the latest was doing when I popped in to hook up his new surround sound. He had everyone going "ohhh ahhh" as he kicked some Joker butt,LOL! And that unit cost less than $500 BTW, really nice little quad core.

Re:Too little, too late

[pnutjam]

You can purchase a gift certificate and apply it to your own account. That's what I do.

"Quikster" split a dumb move to begin with

[elrous0]

I've been using Netflix since they started, and much as I love them, even I was left scratching my head over that one. It was such a bonehead move that the only logic I can see behind it is if they were hoping to quietly sell "Quikster" off later without generating any negative press for Netflix (and their stock). Otherwise it just feels like an insult to their customers (an we had already faced a price hike this year already).

I just can't see how they *wouldn't* expect a negative reaction from customers when you tell them "Now you'll have to visit two different sites, with different queues, different passwords, etc." It was taking something simple and making it a much bigger pain in the ass, for no apparent reason.

Re:"Quikster" split a dumb move to begin with

[Quirkz]

No kidding. A couple of months ago I would have said Netflix was untouchable in its market. But two or three more asinine announcements like they've had lately, and I'd start to think there's plenty of room for non-crazy competition.

Re:"Quikster" split a dumb move to begin with

[Anonymous Coward]

It was such a bonehead move that the only logic I can see behind it is if they were hoping to quietly sell "Quikster" off later without generating any negative press for Netflix (and their stock).

That could have been a large part of it. The DVD portion may be operating at or near a loss and they may want to separate it to later get rid of it and focus on the more profitable side. I still think bundling streaming (for free) with the DVD rental side was just a means of getting folks used to the idea of using streaming and causing them to prefer Netflix enabled devices. Once the number of Netflix enabled devices in the hands of consumers reached critical mass, then it was only logical to separate DVD and streaming. Any other approach would have likely not been as successful.

The other factor could be them wanting to separate both sides of the business to help with streaming negotiations. Right now content providers can easily demand that Netflix only show part of their show and restrict certain episodes to "DVD only". If Netflix were streaming only, then it would put them in a better position to negotiate for full shows, since DVD only episodes would now fall outside of their business.

- Chia

Re:"Quikster" split a dumb move to begin with

[Anonymous Coward]

I think I know what the reason was. Quikster makes Netflix look bad. Every time you do a search it says: Not available instantly but you can get it on DVD. This makes people MORE dissatisfied with the selection on Netflix. And it's reenforced every time you do a search. It makes streaming look like the bastard stepchild and they needed to do something about it. Their choice wasn't the brightest, BUT something will happen to avoid this.

Re:"Quikster" split a dumb move to begin with

[oGMo]

I just can't see how they *wouldn't* expect a negative reaction from customers when you tell them "Now you'll have to visit two different sites, with different queues, different passwords, etc." It was taking something simple and making it a much bigger pain in the ass, for no apparent reason.

Of course, this creates even bigger outcry than price increases, and people stop talking about price issues and start talking about how they're going to cancel entirely when this happens. Then it doesn't, and they don't, but no one's really talking about price increases anymore. Cheap and effective counter to bad PR is worse PR that goes away!

Unfortunately "never attribute to malice that which is adequately explained by stupidity" has a corollary, "never attribute to brilliant cunning that which is adequately explained by stupidity," so I can't quite bring myself to believe this.

Re:"Quikster" split a dumb move to begin with

[jandrese]

I did hear one somewhat compelling theory for the split. Netflix is essentially in the DVD rental business right now, which means they are governed by the same laws that govern Blockbuster and your Mom&Pop video rental store down the street. These consumer protections date back to the 80s and include nuggets like "You can't sell or give away a customer's rental history" (which protected people who rented adult films for instance). With the Qwikster split, they would take all of the regulatory baggage with them and Netflix would be free to sell your information for a little extra dough.

I guess they figured a million users would have made more money than selling that information.

At least now Netflix has a chance. As long as the DVD rental business is their primary source of income, the streaming can be a sideshow and it won't matter that much if the studios try to dick them over with licensing fees and selection. It's trying to survive only on streaming that was insane, because it gives total control of your business over to the studio execs who hate you with a fiery passion for killing off their DVD sales cash cow (even if you didn't really do it).

Re:"Quikster" split a dumb move to begin with

[Kreigaffe]

I'm fairly positive that the whole split was due to negotiations with content rights holders and little else.

It's not Netflix's fault that you can't get a ton of good streaming content from them -- they'd love to be able to provide that, but the content rights holders do not want that to be provided (for any amount of money that would anyone would pay, not Netflix, not you nor I).

The old guard doesn't much care for nor understand streaming content. It makes them uncomfortable.

Re:"Quikster" split a dumb move to begin with

[Myopic]

Well, okay, but that's not quite true. The content owners are trying to get a premium price from Netflix, and Netflix won't pay it. In this disagreement, I'm personally with Netflix: I think movies are vastly, vastly overpriced. But alas, the market apparently disagrees, because many people do pay the premium prices. Not me, but others do. You can hardly blame the movie producers for demanding the maximum possible price.

Re:"Quikster" split a dumb move to begin with

[tripleevenfall]

I think Amazon is going to step in and compete very competently in the streaming arena.

The lynchpin of this whole issue is that Netflix's streaming library completely blows. Nobody wants to switch over to that completely because they can't watch anything they really want to watch - hence the backlash about the DVD service and the price increases. People were okay with using streaming every now and again, since it was free, but when you are reduced to watching made-for-TV quality tripe instead of desirable, first run movies, who's going to pay more for it?

All it would take is a basic streaming service with a decent library. The content is what people pay for.

Re:"Quikster" split a dumb move to begin with

[stillnotelf]

The theory I heard is that the movie companies are pushing for per-subscriber license fees. Netflix owes a small amount of money per streaming subscriber. By splitting out the DVD service, they could take a lot of people out of the column for streaming subscribers, and thus owe less fees.

Re:"Quikster" split a dumb move to begin with

[LanMan04]

I just can't see how they *wouldn't* expect a negative reaction from customers when you tell them "Now you'll have to visit two different sites, with different queues, different passwords, etc."

Well, the reaction Netflix was hoping for was for their customers to drop Qwikster and just go 100% streaming. Bonus points if they made the Qwikster website buggy and terrible in hopes of dissuading people from using it. Then Qwikster goes out of business (on purpose) and the Netflix brand is still strong.

It's obvious Netflix wants to get out of the DVD-mailing business and go streaming-only.

Re:"Quikster" split a dumb move to begin with

[glassware]

Netflix subscribed to a management theory called "eating your own lunch." The idea is that any business, if you wait around long enough, will get mummified as you keep trying to protect the revenue generated by your ancient business model. The theory says that, as the big company keeps struggling to keep its moribund business alive, a younger, hungrier competitor with a slightly different business model will steal your lunch. So, the theory goes, you should eat your own lunch and embark on your own variant business models. That way, when the business world shifts, you'll still be in business.

The theory points to such past projects as the CD industry, Blockbuster, and others. The idea is that such industries failed because they were too wedded to their ideas to change.

The trouble is, Netflix went overboard. They had two different business models running perfectly smoothly side by side. There was no mummification, nothing preventing them from being innovative or seizing on the new streaming business. In fact, their DVD-by-mail business was helping them wield great power in the movie industry, and helping them to get deals for streaming content.

So if they were paying attention clearly, the only reason to kill off the DVD-by-mail business is if it was scaring off the customers, starving the company of funds, or somehow preventing innovation. None of those were true. I'm glad to see they came to their senses.

Re:"Quikster" split a dumb move to begin with

[nine-times]

I just can't see how they *wouldn't* expect a negative reaction from customers when you tell them "Now you'll have to visit two different sites, with different queues, different passwords, etc." It was taking something simple and making it a much bigger pain in the ass, for no apparent reason.

I agree with whoever said it when it was first announced: It seems like they just didn't think it through. IIRC, there was even a quote by Netflix's president when they asked him about needing to manage separate queues, and he was like, "Oooh, right. Good point. I'll have to get back to you on that one."

My guess is that they were so wrapped up in large-scale business strategies, wanting to separate out DVD and streaming for accounting, legal, and/or marketing reasons, and somehow no one stopped to ask, "What will this mean, on a practical level, for our customers?"

Not exactly confidence-inspiring.

Re:"Quikster" split a dumb move to begin with

[omnichad]

That explains the billing split earlier this summer. The branding split was so they could sell off the DVD service when they expected it to fail.

Re:"Quikster" split a dumb move to begin with

[Jiro]

Netflix can rent physical DVDs without cooperation from the studios, because of the first sale right.

They can't do this for streaming. Streaming requires negotiation with the companies, who can charge anything they want or refuse to provide streams at all.

That's why the streaming library blows, and that's why it's always going to blow.

Re:"Quikster" split a dumb move to begin with

[amiga3D]

Well heck, if you want desirable first run movies there is always pirate bay. I have downloaded 4 of those "desirable first run movies" and I gotta tell you I'd never have paid for them. I'm sorry I wasted the bandwidth to download them in the first place. They're off the hard drive now. In all reality there are so few movies worth paying for nowadays. CGI and stunts have replace dialogue and acting. I remember laughing at fart jokes, when I was in the fourth grade. That's the level humor is at in hollywood now.

Re:"Quikster" split a dumb move to begin with

[jedidiah]

...I forgot about that in my other response.

I scaled back my Netflix account. I got a RedBox account. I may cancel my Netflix DVD service if RedBox works out.

I am also looking into and watching Amazon Prime more. It works just as well on my Roku and even better under Linux.

Re:"Quikster" split a dumb move to begin with

[Raenex]

This is a pretty silly theory. Every time you piss off your customers you encourage them to look elsewhere.

Re:"Quikster" split a dumb move to begin with

[jandrese]

Both business models have their advantages and disadvantages.

The DVD service requires them to operate expensive warehouses and pay the Postal Service a ton of money, so the margins per movie aren't particularly high, but they literally only have to buy DVDs off of the shelf to add them to the catalog, so they're almost completely free of studio interference with their business model.

The Streaming service is much much cheaper for Netflix on a per movie bases (a couple of cents of bandwidth), but they're utterly beholden to the studio execs as to which titles they get and how much they have to pay for them. Because of this, it is a doomed business model unless they can get a Steve Jobs type person to woo them they way Jobs did with the major Record Labels back when he was setting up iTunes. That won't be easy either, the Studios are very wary not to repeat the same mistakes they perceive their music rivals as making, giving up too much control for merely massive profits from companies that give the people what they want, not what wrings the most cash out of them.

Re:"Quikster" split a dumb move to begin with

[Lucidus]

What's interesting to me is that, up until these two PR blunders, Netflix was highly respected - certainly here on Slashdot - both for its efficient operation and for an unusually enlightened attitude towards customer service and satisfaction. How did the same people go so wrong so fast?

Re:"Quikster" split a dumb move to begin with

[oGMo]

Pissing off your customers may prod them to look elsewhere, but unless changing is easier than staying, it doesn't really matter. There are always people who will (or will claim to) ragequit a service at the drop of a hat, but most people aren't going to change unless the problem is tangible and the benefit outweighs the effort. In this case, Qwikster never materialized, so there was never really a reason to do anything.

Re:"Quikster" split a dumb move to begin with

[SpectraLeper]

Except that it is starving the company of funds. According to this article, DVDs cost almost $1 just to ship. Factor in the cost of the disc, the infrastructure, etc. and it barely pays for itself for normal customers. With super-users who can get 2 or 3 DVDs per week on a one disc plan, Netflix is practically hemorrhaging funds to keep the system around. Hence, the plan to split and, soon after, sell-off that half of their business.

Re:"Quikster" split a dumb move to begin with

[Solandri]

Negotiating with studios for streaming rights probably had something to do with it. The DVD rental by mail business was an established business model. It may not have had the greatest margins, but it was cash-flow positive. Streaming OTOH was a new business model. Netflix thought it could support x% of revenue allocated to licensing costs. The studios thought it could support a much higher percentage.

By having both business operating under the same roof, Netflix could offset some of the risk of streaming with its mail-DVD cashflow. If their negotiations with the studios erred too much in the studios' favor, they could stay afloat by cannibalizing profit from mailed DVDs. By (1) separating out the accounting of the two businesses (what they tried when they separated pricing for streaming vs. mailed DVDs), or (2) separating the two businesses entirely, they removed that safety net. They could legitimately argue with the studios that "hey, our numbers just don't work with the amounts you want for streaming licenses - people just aren't willing to pay that much and we will go broke."

I suspect they're trying to prevent the streaming business from becoming like movie theaters, where they do all the distribution work but nearly all the revenue goes to the studios, and they have to sell overpriced popcorn and drinks to stay afloat.

Re:"Quikster" split a dumb move to begin with

[Anonymous Coward]

Meaning they have forgot who pays the bills, the customers. Meaning they are coasting and think they can jam thru anything that pops into their head. Much like their streaming site redesign a few months ago. Still crap... I have used it for a few months now and can safely say the larger amount of info on the screen is 'nice' but the interface doesnt work...

Re:"Quikster" split a dumb move to begin with

[leonardluen]

the theory i heard was that netflix thinks DVD's is eventually destined to fail, and that the future is streaming, and so they wanted to spin of Qwikster to make it easier for them to remove themselves from the DVD business with the eventual goal of selling it off or shutting it down without it hurting their core business (streaming) too much. and supposedly netflix always had wanted to be streaming only (hence the name netflix), however they realized previously that the internet infrastructure just wasn't ready yet at the time.

much of my theory comes from this

Re:"Quikster" split a dumb move to begin with

[Anonymous Coward]

the "effective" PR resulted in me canceling DVD's all together and I am even thinking of switching back to cable and getting rid of the streaming all together as a result. So causing a million member drop plus up to 24 million uneasy customers that are hanging more by a thread due to trust issues...

I should note that I HATE my local cable company. The difference is i know exactly what to expect from the cable company.

Re:"Quikster" split a dumb move to begin with

[Raenex]

I don't buy it. There's too much that can go wrong, and there's too much competition now that you'd want to piss off your existing customers. It's not hard to change at all when it comes to video rental services, unlike moving away from a site like Facebook.

What Netflix has going for it is brand awareness and customer loyalty. They're eroding that with all these false starts.

Re:"Quikster" split a dumb move to begin with

[mlong]

And there are also customers who get the DVD and leave it sitting on the shelf for weeks until they watch it. It no doubt all equals out with those customers counter-balancing the ones who send the DVDs back the same day

Re:"Quikster" split a dumb move to begin with

[snowgirl]

Cheap and effective counter to bad PR is worse PR that goes away!

Ah... the New Coke theory... I've heard much of this theory before. :)

Re:"Quikster" split a dumb move to begin with

[Anonymous Coward]

Something like that happened at our office. The phone system here was costing a fortune every month. They were so ready to replace the system with the lowest bids that they went VoIP here. Great, savings every month and the phones can be taken home in the event of bad weather.

Well, except that the person in charge of replacing the phone system forgot about the 4 fax machines. We couldn't do any faxing for more than a week until the local bell company came out and installed analog phone lines.
 
It was one of those not well thought out ideas.

Nathan

Re:"Quikster" split a dumb move to begin with

[badboy_tw2002]

Fun fact: Netflix envelopes also quickly and conveniently fold into brainwave blocking hats, thus preventing them from data mining your brain. Of course, this encourages you to not return the DVD in the convenient envelope, thus lowering their price per customer and improving profits. A conspiracy against people who see conspiracies - the worst kind and the most devious!

Re:"Quikster" split a dumb move to begin with

[Anonymous Coward]

I consider the $5 bin at Walmart to be overpriced. Hopefully more people will come to feel the same over time.

Re:"Quikster" split a dumb move to begin with

[Myopic]

Perhaps eventually there could be a movie that I would like enough to pay as much as $5 to have on hard copy, but I haven't seen it yet.

Re:"Quikster" split a dumb move to begin with

[Belial6]

The smart thing to do would be to fund a "separate" company that would test the legal waters of purchasing one physical disk for each stream that is being run at a time. Thus, they wouldn't be "streaming movies". They would be "space shifting" the rented disk. They could call this service something like "Quikster". If the spin off company wins in the court but dies due to the cost, that just becomes part of the legal cost. Netflix itself can then start using that tactic. If the company takes off and eclipses Netflix itself, Quikster is born and is more healthy than Netflix could have hoped to be as a negotiated streaming service. If Quikster loses in the courts, then it is still just part of the legal costs, but Netflix is free to continue on their current path.

Re:"Quikster" split a dumb move to begin with

[Fnord666]

No kidding. A couple of months ago I would have said Netflix was untouchable in its market. But two or three more asinine announcements like they've had lately, and I'd start to think there's plenty of room for non-crazy competition.

Netflix does seem to have snatched defeat from the jaws of victory.

Re:"Quikster" split a dumb move to begin with

[jandrese]

A company already tried this. They were sued out of existence.

Re:"Quikster" split a dumb move to begin with

[Belial6]

I recall reading that there has been some progress recently. One of the music storage companies successfully won a lawsuit concerning them storing CDs remotely. Of course, that is why you do it with a spin off. Just in case.

Sudden outbreak of common sense

[DragonHawk]

The real news here is that this shows just how poorly conceived this idea was, and a real lack of planning and vision at the top. Not good. Netflix must really be feeling the heat from the studios -- not to mention competition -- to be flailing about like this.

Re:Sudden outbreak of common sense

[hedwards]

That was more or less my thought on the matter. I've switched to Blockbuster for my movies, same price similar selection and games thrown in there as well.

I might go back to Netflix eventually, but only if the roll out that Blockbuster has hinted at for an all you can eat streaming plan comes through. I'm not switching to Dish Network just so that I can get unlimited streaming from them through.

Beyond that there's, Crackle, Hulu, Amazon and don't forget about the official streams that some channels now have to offer. Netflix managed to screwed itself over with the sheer incompetence of recent announcements. I'm probably going to get a box to connect my laptop up to my TV until I can afford a new one with HDMI inputs.

Re:Sudden outbreak of common sense

[taxman_10m]

When you say Blockbuster, do you mean their actual stores? They are all gone around me unfortunately.

Re:Sudden outbreak of common sense

[SteveInMI]

On the other hand, how refreshing is it to hear a CEO put his ego aside and say to his customer base, "you're right, that was a dumb idea; we'll undo it." How often have you seen them take the other approach - trying to prove that they were right all along by sticking MORE stubbornly to their plan? It's utopian to wish for CEO's never to do dumb things. But it would be a better world for consumers if CEO's - when they DO make dumb moves - would more often be willing to reverse course.

And the Soner kid with the twitter...

[Moheeheeko]

..is kicking himself for not taking the $1k he was offered for it.

Netflix - the company that can stupid

[Anonymous Coward]

Funny how netflix seems to have terrific skill at making bad decisions and turning off their customers these days.

The rate hike remains, of course

[EmagGeek]

Don't overlook that...

Re:The rate hike remains, of course

[murdocj]

The rate hike is not a big deal. I was doing the 2 DVD plan and I switched to the one DVD at a time + instant, which kept my rate the same. Having to manage two separate queues would have been way more of a problem than the price increase. Clearly Netflix had some sort of "group think" going on if they didn't realize that raising rates and simultaneously making the service worse wouldn't be a problem. But given this change, I think Netflix still provides good service... very fast turnaround on DVDs, excellent streaming. I have no problem paying $15 / month for that.

Re:The rate hike remains, of course

[The Pirou]

The rating hike is negligible though. The cost to have streaming + 3 Dvd's out at a time is still less than what Comcast and other service providers are charging for basic cable. With Hulu being free to watch new episode content, I'm still happily along for the ride that Netflix is offering.
It was the idea of having to login to 2 different websites to find what I want to watch that really chaffed.

Re:The rate hike remains, of course

[ColdWetDog]

Interesting. I dropped my two disk plan + streaming for a one disk plan because streaming sucked. Lousy selection that changed from day to day. Lousy compression artifacts (on a 3 Mbs DSL link). Dropped down to 1 disk because there is actually very little that my wife and I found we were interested in watching. After you spend a year going through the classics, then there isn't a whole lot left....

And don't get me started on the 15 previews per disk.... The best user experience I've had is ripping the DVD down to the hard disk and playing it from there. No stutters from the scratches. No previews. Now I'm just one step from going to the Pirate Bay for content.

Way to go, folks!

Re:The rate hike remains, of course

[murdocj]

I'm actually getting more into streaming. The selection isn't perfect, but I manage to keep finding interesting stuff to watch. I do watch on my computer (24" monitor) with a 3mb connection, and on that setup, the picture quality is fine. I have fairly lengthy queues of both DVDs and streaming that I want to get to, but I also don't watch that often. It can take me a week or more to get around to watching a DVD.

Re:The rate hike remains, of course

[Doctor Faustus]

I always assumed the pricing they had was temporary.

3 DVD's at a time was something like $15-$20 per month (I lose track with the Blu-Ray fee), and then streaming was added without a rate increase and without reducing the available DVDs. That's just too good to be true, except as a promotion.

Credit where due

[jythie]

While I agree this is baffling and shows they are having issues understanding their customer base.. I will give them credit for both being willing to try something they think will improve service AND being willing to cancel the plan when their customers point out how bone headed it was. A lot of executives are not willing to do either of those, esp the latter. In the high stakes realm of the boardroom, careers can be made or broken based off doggedly not admitting you are wrong.

Re:Credit where due

[Anonymous Coward]

Agree, completely. They could have tried bouncing the idea around internally to a few dozen users first, that should have been enough to kill it, but at least they had the good sense to listen to public reaction.

Re:Credit where due

[jythie]

It is possible that they did just that and simply ended up with a view that did not represent the whole (or at least the noisy) well. That is one of those pittfalls with trying to figure out what your customers want.. sometimes even with real data and the best of intentions, once the broader group is involved things can come out differently then the test market. Just look at New Coke.... they had a solid idea, they tested the product and found people liked it, marketing information pointed towards such a change being 'the future' and 'what people wanted'.. every indicator they had to work with said it would be a good idea.. but once it hit the market.. splat.

Re:Credit where due

[mjr167]

Yeah but why didn't they send out a survey and poll their customers to determine how real people would feel about the change before going through all the effort of formalizign a plan, etc.

Re:Credit where due

[swb]

What surprises me about this is it seems like they're not doing a good job of marketing.

When they decide to change the flip-top on a bottle of low-budget shampoo, most places do polls, focus groups, read consulting reports and so on before they ever make the change.

You would think that Netflix would be doing the same thing if they were considering such a change.

My instinct tells me that something's wrong there. Take your pick -- Reed Hastings thinks of himself as a prophet and rejects advice from marketing, only hires yes-men for marketing.

Or it goes beyond Reed and the company as a whole doesn't seek outside information and they have become an echo-chamber and they only hear their own ideas. The echo around enough until it sounds like a good idea.

Re:Credit where due

[tverbeek]

No. All Reed Hastings has shown here is that he isn't paste-eating retarded. You don't get "credit" as a business executive for that.

Re:Waah waah

[DocSavage64109]

As a Netflix DVD subscriber, I'm rather happy that they've decided to change their plans and maintain their current services. Has any of this drama impacted your service? Are you now buying DVDs or Blurays at $15-$30 each? Also, I'm glad to not be subsidizing all of those instant view customers any more.

YO YO

[kodiaktau]

What a terrible group of leaders Netflix has. I was a customer for a total of 48 hours because they changed the price on me overnight and sent me a nice email about the change. Screw Netflix. As long as it can maintain machines and relevant titles, Redbox will end up eating their lunch anyhow.

And the price...?

[timeOday]

Hey Netflix, while you're eating crow, how about rewinding another couple months and rescinding the price hike as well?

Re:And the price...?

[Cruorin]

The price hike is making them an enormous amount of money. They lost 4% of their customers, but are charging almost double. I would assume that enough customers kept their old plans to make up that loss many times.

Re:And the price...?

[Danathar]

Did you LIKE the content prior to the price increase? Which was mediocre and shrinking (starz leaving). Which would you rather have? No neflix or a netflix at the current prices?

Re:And the price...?

[nine-times]

Honestly, I don't want them to lower the price back down. I want them to use that increased revenue to license more streaming content. In fact, if they could get to the point that I could pretty much assume that a movie will be available for streaming (and I won't have to get the DVD), and then generally get TV shows as they air (as Hulu, Amazon, and iTunes do), then I would be willing to pay... like maybe $50/month.

Maybe they could throw in a music library (à la Spotify) for that price?

Of course, that's exactly what the media companies who control the licensing *don't* want. It would destroy cable.

Re:And the price...?

[Anonymous Coward]

Newsflash genius: That IS cable. Even more surprising, they offer new movies for streaming, or OnDemand, that you are free to spend the money to watch. They even have dozens of music channels too.

What you and the countless other streaming only folks fail to realize is that what you want cannot exist. You want to spend $50 a month to have exactly what cable already offers you just using a different distribution. Cable companies already own your broadband and they are capping your limits. Once streaming reaches the maturity point you desire of it, it will cost as much as cable does now, have commercials, plus you will still need to pay the cable company for the internet feed.

If you think otherwise you're either incredibly naive or just downright delusional.

Re:And the price...?

[Anonymous Coward]

But how many people are following my course of action? I've stopped adding to my queue and once all of the movies are cleared, I'll be cancelling. I'm 2 dvd's away now....

Re:And the price...?

[timeOday]

Honestly, I don't want them to lower the price back down. I want them to use that increased revenue to license more streaming content.

The revolt would have been much smaller if they had phased in higher prices while also phasing in greater selection. Instead they simply said, drop your drawers. Even now there is no promise of increased selection. They got Dreamworks but lost Starz, which is at best a wash.

Re:And the price...?

[Anonymous Coward]

The price hike is allowing them to buy streaming content, so they're not exactly "making an enormous amount of money." If anything, they may be netting less after paying off the gouge from the studios.

Re:And the price...?

[Anonymous Coward]

They might be charging a double but I doubt that they are making double. I would guess that since they made this decision so quickly they are making less than before, probably a lot less.

The problem is not that they lost 4% of the customers. My guess is that they had a lot of the customers who switched to the "cheaper" plans. As a result the customer satisfaction is probably dropping like a stone. The problem with their online only plan is poor selection. It might last a month a too but after that users will start to leave in droves.

Netflix is a great case study for business schools on what happens to companies that don't understand what their competitive advantage is and why you shouldn't screw your customers.

Link to actual Netflix blog post

[rminsk]

http://blog.netflix.com/2011/10/dvds-will-be-staying-at-netflixcom.html

At this point...

[mrquagmire]

At this point I would have more faith in a group of children running Netflix than I do in their current management team.

Integration with Facebook?

[knitting fool]

A guest on an NPR show the other day speculated that a partnership with Facebook was part of the motivation for the split. The gentleman described Facebook's new "tell everyone exactly what you are doing right now including naming the movies you are currently watching" plan, and then speculated that current privacy laws wouldn't allow Netflix to share information about DVD rentals. The privacy laws for streaming, he thought, might be a bit hazier, and by separating the two Netflix might be free to share that information with Facebook.

Sorry I can't find a link to the article at the moment. It was the first not-insanely-unreasonable argument I had heard for the division. (although perhaps still a bit unreasonable.)

Re:Integration with Facebook?

[slyrat]

Well I found this article on it: tech crunch netflix-facebook app
Though honestly I really hope this is just an app you can use in facebook rather than having the facebook login go to netflix.

Re:Integration with Facebook?

[amiga3D]

Assume the worst.

Re:Integration with Facebook?

[Anonymous Coward]

Exactly, because unless a company is linked by the loving umbilical of web 2.0 to FaceSpace, they will falter, stumble, and then collapse in a fiery and violent maelstrom of disappointment.

Re:Integration with Facebook?

[Anonymous Coward]

Wouldn't you have to tie the two together anyway?

Re:Integration with Facebook?

[game kid]

Ick. I can just imagine it...

"But Master Hastings, Legend Sir, our--"

*sighs* "Legendary..."

"customers are pissed about the whole pric--"

"Fuck the customers, we've got Facebook wall time to get! Facebook! The place with the farms and the poking! We can be rich like Zuck! Rich!"

"But customers, like, pay us for stuff, Legenda--"

"FOR FAAAAAAAARMVIIIIIIIILE!!!!!!" *puts on lacrosse helmet and mounts horse*

"...ry Sir."

*rides east toward a highway* "Hyah!"

"Uh...Master Hastings?" *picks up lacrosse stick* "...the lance?"

Re:Integration with Facebook?

[gmhowell]

Who is Desdemona in your little drama?

Big mistake

[Spazmania]

Their DVD and Instant businesses conflict with each other, as witnessed by the decline in availability of new DVDs and the web site rearrangements that make some sense for instant but make it much harder to find DVDs. Splitting them gave the two businesses a chance to thrive separately.

Re:Big mistake

[Anonymous Coward]

The two businesses don't conflict. That is like saying selling chicken nuggets conflicts with selling hamburgers. Would McDonalds survive if it split the chicken nuggets and the chicken sandwich off into its own business? Not likely. Having diversity in your offerings provides a safety net. One can decline and the other can grow. While one product disappears you can make money on the other and research a third product. Look at Amazon. They used to only sell paper books online. They expanded into music and other stuff. Now they are offering digital books as the paper ones decline. They didn't split off each businesses as they went along.

Re:Big mistake

[boristdog]

Agreed. There is still a huge chunk of the US population that lives in areas with slow or no broadband.

The DVD service is all we can and do use.

Re:Big mistake

[Spazmania]

You don't go to McDonalds for Fried Chicken. McNuggets are a sideline, for the person in the group who doesn't want a sandwich so he doesn't fight as hard for going to another restaurant.

Netflix has a tension between two competing primary products: DVDs and Streaming. This has resulted and will continue to result in compromises made between the two which are detrimental to them both. Distinct companies wouldn't have needed to make such compromises, even to the point of competing with each other.

Remember: compromise is a synonym for congenial agreement, but it's also a synonym for catastrophic loss. That's not an accident.

Re:Big mistake

[Wolfrider]

--I have really good broadband. However, I use it for other things (i.e. NOT MOVIES.)

I don't have a bandwidth cap that I know of, but DVD-by-mail is ideal for my usage pattern. Very happy with Netflix (including the price increase. It's really not that bad.)

Re:Big mistake

[bill_mcgonigle]

Their DVD and Instant businesses conflict with each other

I disagree. I would have stayed with Qwikster and my streaming business would have been completely open for market options.

Since my queues are still integrated and I can move videos between DVD and streaming, I'll stay with Netflix streaming too.

Also,

[Zouden]

"We realised that Qwikster sounds like the sort of company that made spyware in the late 90s".

Re:Also,

[sorak]

Or it could be one of those company's that sends you stupid videos and pictures of the situation's abs.

Re:Also,

[Anonymous Coward]

Download WeatherBug 2.0 and get Bonzi Buddy for free!

Alternative to Redbox for older films?

[tepples]

As long as it can maintain machines and relevant titles, Redbox will end up eating their lunch anyhow.

Perhaps you define "relevant titles" differently than I, but in my experience, Redbox keeps a movie in stock for about a year before it's no longer in any machine nearby. What do you do if you want to watch a movie that isn't a new release anymore, or do you just abstain from older movies?

Re:Alternative to Redbox for older films?

[Anonymous Coward]

I can't believe people use redbox. Do you not understand what year it is?

Re:Alternative to Redbox for older films?

[tepples]

The year is 2011. And despite the year being 2011, fast Internet connections[1] have still not reached 100 percent of homes in the United States.

[1] Streaming even SDTV pretty much needs cable or DSL, not dial-up or satellite.

Re:Alternative to Redbox for older films?

[tmosley]

I know, movie vending machines are SO 4 months ago.

Re:Alternative to Redbox for older films?

[Myopic]

Holy crap. Did you say dialup?

Re:Alternative to Redbox for older films?

[amiga3D]

Dialup is still the only alternative for a lot of people. For some who generally only want e-mail and the occasional web research it's actually okay. I love my 20mbps cable connection but really if it was gone I'd probably just go back to having a life.

Re:Alternative to Redbox for older films?

[Psx29]

The library. Seriously. Most libraries have a wonderful catalog of older movies that you can borrow (for free!).

Re:Alternative to Redbox for older films?

[kodiaktau]

Agreed. Libraries, friends and other retail outlets have tons of these older movies for a lot less than a month rental of Netflix. For the folks in rural areas there are no really good options. Sometimes we are lucky enough to live in a local loop, but in most cases you use dial-up or some Verizon card to get access to the internet. Physical access to media is the only way to overcome these situations.

agility vs transparency

[nobaloney]

What Netflix has shown us is that they're (a) transparent, and (b) agile.

We've said for years that new companies beat old companies hands-down because of their agility. We've said we value transparency.

So now we get both, with all the messiness that implies, from one company, making one misstep after another, and then backtracking as it needs to.

And we complain.

Note I'm not saying that I like Netflix's new pricing; I don't. And I'm not saying I've liked the drama of the past few weeks; I haven't. But by taking this step they've removed most of the reasons I would have to quit, and I'm staying.

Disclaimer: Within the last month I took delivery of an internet-connected home-theater system with 65" screen and 5.1 Dolby sound. I didn't buy the 3D glasses because currently available 3D content sucks, and I'm not paying more for the Netflix BlueRay subscription because there just aren't enough BlueRay discs available. But I am going to keep both my three-at-a-time DVD plan and my streaming plan, because between them (and with their usually good-enough recommendation engine) I'm getting movies I might never see otherwise.

Re:agility vs transparency

[maxume]

Your comment only makes sense if you insist that "us" and "we" are coherent descriptions of the people that post here.

"Some of us" and "some of you" make more sense to me.

Re:agility vs transparency

[SteveFoerster]

Very insightful. Also, people like me don't necessarily want to watch a particular show right now, when I do watch TV I usually just want to watch something interesting in a particular genre. Netflix's streaming selection is perfectly fine for the latter.

Re:agility vs transparency

[nobaloney]

I should have been more specific; my meaning is intended to be the collective we and the collective us.

Re:agility vs transparency

[tverbeek]

Agility is not a virtue when routinely used to run into traffic.

Re:agility vs transparency

[maxume]

My point is that the "collective us" isn't a coherent group, you shouldn't expect coherent behavior.

Tone deaf again

[LMacG]

"It is clear that for many of our members two websites would make things more difficult"

So he thinks there are people (who want both DVDs and streaming) for whom that wouldn't be the case?

This guy seriously needs somebody to keep him from attempting to communicate with the public.

Re:Tone deaf again

[Myopic]

Seriously. Was it not clear before a million customers told him so? Really?

Re:Tone deaf again

[Anonymous Coward]

I for one welcome crowdsourcing of executive decisions.

Re:Tone deaf again

[Anonymous Coward]

My inbox today:

Netflix Receiving
We've received (DVD title 1)
Netflix Receiving
We've received (DVD title 2)
Netflix Receiving
We've received (DVD title 3)

Then a few minutes later I get:

Netflix
DVDs will be staying at netflix.com

My first thought was that they weren't going to send me my next set of movies!

Seriously, this guy needs to learn how to communicate better.

Re:Tone deaf again

[gmhowell]

I suspect the dipshit doesn't eat his own dogfood.

Content

[mu51c10rd]

It's the content. Netflix realized they need cash to throw at the studios who are now demanding significantly more. Even tossing a %1,000 percent increase at Starz was not enough to keep their contract. Look at how much they inked a deal with Dreamworks. Why didn't the customer base get upset at the studios for not allowing their titles can stream to a larger audience? Slashdot tends to get upset quickly at the music studios, but do we collectively give the movie studios a free pass? Netflix was the best company at providing a legal alternative to unlimited streaming of movies and TV shows.

Re:Content

[timeOday]

Why didn't the customer base get upset at the studios for not allowing their titles can stream to a larger audience? Slashdot tends to get upset quickly at the music studios, but do we collectively give the movie studios a free pass?

Customers who cancelled their Netflix subscriptions did show their upset to the movie studios, in the only way that matters - by placing a limit on what they are willing to pay. Conversely, those who did nothing are simply asking for more of the same down the road. And if Netflix is unwilling or unable to negotiate lower prices to its customers than any other distribution channel, then it really has nothing to offer.

Re:Content

[Anonymous Coward]

Because that's not the reason given by Netflix for the cost increase. If they had given that as the reason, people would have been more likely to go along and not complain (as much).

Customers

[mu51c10rd]

To be fair, they only lost 1 million out of an original 25 million. I would hardly call that a mass exodus. Unfortunately, investors panicked and their share price did plummet. Shame that we punish Netflix for a 6 dollar increase, and do nothing about the movie studios requiring significantly larger contracts that Netflix needs to find the cash for.

Re:Customers

[jandrese]

That's still a substantial customer base reduction in such a short period of time, and it doesn't even count the people who dropped one part of their service and/or downgraded their plans. Those people could be one step away from cancelling entirely.

Qwikster was such a stupid name anyway.

Re:Customers

[Anonymous Coward]

What business do you run that you feel that losing 20,000 paying customers a day isn't a relevant drop, Bank Of America?

Re:Customers

[MBCook]

How many million more would have fled had they pushed Quickster into production?

Re:Customers

[bratwiz]

To be fair, they only lost 1 million out of an original 25 million. I would hardly call that a mass exodus. Unfortunately, investors panicked and their share price did plummet. Shame that we punish Netflix for a 6 dollar increase, and do nothing about the movie studios requiring significantly larger contracts that Netflix needs to find the cash for.

Boy, you can say THAT again. Sheesh.

Mod this guy up to an 11 !! He's got the quote of the day.

Re:Customers

[TClevenger]

Shame that we punish Netflix for a 6 dollar increase, and do nothing about the movie studios requiring significantly larger contracts that Netflix needs to find the cash for

Most of us didn't punish Netflix for a 6 dollar increase. In fact, we know that the movie studios want Netflix dead so they can go back to their 3-day "rental" for $3 plan (ahem, iTunes.)

It's the fact that Netflix tried to push this price increase as a great thing for consumers that pissed us off. Complain about how the movie studios are putting the screws to us (and maybe mention some places we can write to to complain), and you'd have us firmly on your side. Bullshit us by posting "our lowest prices ever" and "great value" on your blog, and we'll react.

Re:Customers

[dogmatixpsych]

Netflix did not lose 1 million customers. They revised their projected membership numbers down by 1 million total. They lost around 400,000 customers, mainly due to the price changes. You're correct, investors have overreacted. Netflix will be better off in the long run because of the changes they've made. That they are able to respond to customer demand and retreat from ideas shows a willingness to survive rather than just make as much money off the customers and then go belly up.

Re:Customers

[mu51c10rd]

Probably many more. I admit, I was seriously thinking of leaving Netflix...just waiting to see how the Qwikster thing looked and worked before judging it. I think the split would have been more detrimental to them than the price increase. At least we will never know...

Re:Customers

[mounthood]

The share price crashed more than 50% before Qwikster; it was a response to the drop not the cause. Slashdot called it right when they announced it: http://news.slashdot.org/comments.pl?sid=2434922&cid=37439742

Re:Customers

[Anonymous Coward]

It was the way the increase was handled that has caused all the problems. Sure, I don't know anyone who liked it increasing that much all at once, but to try to pull it off as a good thing was just stupid.

Re:Customers

[Kethinov]

Shame that we punish Netflix for a 6 dollar increase, and do nothing about the movie studios requiring significantly larger contracts that Netflix needs to find the cash for.

If Netflix had taken a hard line against those studios and publicly stated that studio-imposed license fees are too expensive to sustain the current pricing models, then I suspect people would be a lot less pissed at Netflix and a lot more pissed at the studios.

Instead Netflix just swallowed studio greed and passed on the cost to their users. So forgive me if I don't sympathize much with Netflix being punished by public opinion.

Re:Customers

[gumbi west]

Ahem, this is how consumers punish a supplier. You can't punish them directly, you have to punish them by not buying from the final point of sale.

It's like saying if I boycott OPEC oil, it's a shame that I'm punishing BP who is just trying to sell it.

Re:Customers

[symbolset]

And after you call out your business partners as greedy pigs, is that going to make them more, or less, willing to negotiate with you if you're Netflix?

Re:Customers

[skiingyac]

Even worse, a huge chunk of the market for "occasional" or "light" users of netflix has now been destroyed.

The people who've left for price reasons are those who (like me) were happy paying $8/month for the ability to always have a DVD to watch in case you wanted to, and always have instant movies to watch. On average I got about 3 physical DVDs per month, sometimes less, and 1-2 instant old movies or random shows. From what I've heard, netflix's cost is $1 per physical DVD, and not a lot for the instant "junk." So, they lost a highly profitable customer they're making $5/month on. But, they get to keep the customers who pay $8/month and get probably about 4-6 DVDs a month (otherwise redbox is probably better) making them barely profitable. And, they get the customers who pay $16-20 a month for mail+instant and get again at least 4, but likely more, DVDs a month plus now will demand better instant selection which must be costing them a good chunk. All these customers have lower profit margins... good job netflix.

Re:Customers

[Anonymous Coward]

Or those of us who dropped DVD, and will drop streaming once Netflix loses its contract with STARS (and thus most of their movies). That is if I don't drop it before hand.

Re:Customers

[fibonacci8]

Especially since it likely would've been pronounced "Keister" based on the reputation it'd've inherited.

Re:Customers

[Anubis IV]

To be fair, they only projected a loss of 1 million, 400,000 of which were expected new subscribers who they removed from their projections. "Only" 600,000 came from their existing subscriber base.

Re:Customers

[mattack2]

As well as lost customers, what about people who downgraded?

I downgraded to 2 DVDs at a time (from my previously-grandfathered 4 DVDs at a time). So instead of ~$20/month from me, they're getting I think $13/month from me, at least for now.

The reversal will now make me reconsider adding streaming in now and then, even though I far prefer DVDs (extras, subtitles, etc.).

Re:Customers

[Anonymous Coward]

It was the lowest price ever and still is a great value though. It seems giving whiny customers free streaming was the real mistake.

Re:Customers

[Dthief]

20 cents per DVD 5 cents per stream

Re:Customers

[skiingyac]

No way 20 per DVD is right... just the physical cost of disks is higher than that... even $20/disk... lets say it is rented once a week for a year before its obsolete... that's 40 cents per rental... plus shipping both ways has gotta he another 40 cents minimum

Re:Customers

[Kethinov]

The studios don't hold all the cards. If they don't negotiate with Netflix then what streaming service do they negotiate with? Since there are none others which offer a similar user experience at a similar price, negotiations breaking down with Netflix will just result in more piracy from that unserved segment of their audience.

Re:Customers

[Dthief]

ya, i reread the article I got that from and it was 5 cents and 20x, so its 5cents / $1

it was an old slashdot link

Now...show intelligent corporate governance, and

[argStyopa]

....fire the guy whose catastrophically stupid idea that was.

And probably his boss, for approving it.

Seriously, it was an abortion from the first moment. Conceiving it, communicating it, championing it, apologizing for it, then backing away from it - all a disaster.

OK, credit them one TEENSY bit for finally acknowledging that annoying their ENTIRE customer base, making using their service MORE difficult to use, and then resisting to almost the last man until finally capitulating was stupid. Um, congrats?

Pass the bong

[HangingChad]

Whatever they're smoking in the Netflix executive offices, they need to consider rehab before they run the company into the ground. Anyone with a firm grasp of the obvious knew that Qwikster idea was a loser and then their tone-deaf PR rep comes out and calls their prices increases a "couple of lattes" at a time when unemployment is running at over 9 percent. How does that idiot still have a job?

If the impression they're trying to convey is incompetent management, mission accomplished. The only stupid thing they haven't done is hire Dick Cheney as an image consultant.

Re:Pass the bong

[SteveFoerster]

Anyone with a firm grasp of the obvious knew that Qwikster idea was a loser and then their tone-deaf PR rep comes out and calls their prices increases a "couple of lattes" at a time when unemployment is running at over 9 percent. How does that idiot still have a job?

Maybe that was aimed at the 91% of workers who therefore do have a job. The economy could be better, sure, but this isn't exactly the Great Depression.

Re:Pass the bong

[HangingChad]

In point of fact, the employment situation is, in some ways, worse than the Great Depression. While there may not be 25% full time unemployment, if you count the under-employed, the rate is very close.

Re:Pass the bong

[SteveFoerster]

If you count the underemployed then you're comparing apples and oranges. The problem with the Great Depression wasn't that you might have to go work at Best Buy or at a call center or whatever, it was that there wasn't a job available at any level for five hundred miles in any direction.

Re:Pass the bong

[HangingChad]

There are no Best Buy or call center jobs. People would be grateful to have even that crap work.

What country do you live in?

Re:Pass the bong

[SteveFoerster]

The U.S., where I work for a university that helps its graduates find jobs. You?

Re:Pass the bong

[Fnord666]

The U.S., where I work for a university that helps its graduates find jobs. You?

How is that working out for your graduates these days? What percentage of the students graduate? What is the median salary of one of your graduates one year after graduation? What is the median amount of debt that one of your graduates has on graduation day?

Re:Pass the bong

[SteveFoerster]

Most of our students graduate, and of those most find decent jobs in their fields. I don't know about their debt since that's none of my business, but our tuition rates aren't unreasonable.

Sorry to disappoint you if you were looking for some sort of smoking gun or whatever. College still mostly works, and there are mostly still jobs out there. Yes, I realize it's possible to wildly overpay for college and end up with stupid debt, and that not every major leads to a high paying job. But such is life.

Some time places change names make employees

[Anonymous Coward]

and franchises pay for new uniforms / signs and other stuff. As for uniforms I have seen as high as $25 shirt + $15 shipping must buy 3 shirts min per order + must buy business cards as well. And that is for a 100% commission job.

Right Move Too Late

[sarbonn]

I'm usually not a very reactive kind of customer. I tend to let things go and not really give them much thought. However, I remember some time ago, I got upset that Netflix was raising its prices. So, I switched to only one dvd at a time from three. Quickly, Netflix reversed its decision, and I went back to three dvds. Then they decided to raise prices again and immediately split the company into two. I found myself somewhat insulted by all of the ceo's comments in response, almost as if he was an adult talking to little children. So, I closed out my account and left. Now, they're trying to fix this faux pas again, and unfortunately, many people like me aren't going to come back. It wasn't really the price increase or even the splitting of the company. It was being talked down to like a child by a company I have given business for many years now. I decided they can do well without me. From what I now see, they're realizing they can't. But when you lose a customer, you lose a customer. Sorry, but that's how business works sometimes.

Re:Right Move Too Late

[hedwards]

I might eventually come back, but with the competition heating up, I'm not really sure that it's in my interest to do so until I see what the competition makes of this. Blockbuster has met and beaten Netflix's offer for the DVD portion, and I'm sure that somebody is going to come up with a competitive option for the streaming. But, even if they don't, I can hook my laptop up to a TV and get all sorts of free programming without having to resort to piracy.

It's tough to compete with free, and I think Netflix would do well to remember that.

Re:Right Move Too Late

[JoeSchmoe007]

Same here.

Re:Waah waah

[jdpars]

Subsidizing us? You think it's more expensive to stream a movie to a computer than to mail a physical disk? Really?

Amazon, not Customers

[MichaelJ]

They may or may not be responding to their customer base, but I think they're more afraid of Amazon, who have been increasing their available online content, streaming as well as purchases. The Kindle Fire announcement marked Amazon as a big player in the online media world, and I'll bet suddenly Netflix realized they were the third wheel next to Amazon and Apple.

That was Quick!

[bigredradio]

That was Quick!

Thank you. I'll be here all week. Don't forget to tip your waitress.

Re:That was Quick!

[supersloshy]

That was Qwik!

Thank you. I'll be here all week. Don't forget to tip your waitress.

FTFY ;)

Actually he was good; as far as CEOs go

[bussdriver]

He admitted the mistake and turned it around after investing a great deal in his blunder. Most CEOs today do not give in so easily to reason, they will continue down the foolish path they set CONFIDENT they will be vindicated later (and still feel good after they leave with a huge bonus and their plans "not performing to expectations" and blame external forces like "bad economy" or something about the timing implying it was a great idea ahead or behind the current market climate.)

Re:Actually he was good; as far as CEOs go

[Anonymous Coward]

Anyone getting ceo money isnt allowed to make mistakes.

Just got the official email about this

[J-1000]

From the email:

While the July price change was necessary, we are now done with price changes.

Why would he say this?? It's off-topic to begin with (the email was about Qwikster), and he's setting himself up to be a hypocrite. What happens when it really is time for the inevitable price change? Has he never heard of inflation? Does he expect the industry to remain changeless? He must have one heck of a crystal ball.

Someone else needs to write Netflix's emails.

Re:Just got the official email about this

[Myopic]

They had three price increases in two years. They'd better be done for a long time.

The third price increase was too much for me; they finally priced me out.

Re:Just got the official email about this

[Anonymous Coward]

So the price went from 8$ a month to 16$/month... and that priced you out?

If you are living so close to the edge that 8/month breaks the bank, then possibly you shouldn't be paying for netflix in the first place.

Re:Just got the official email about this

[indecks]

Don't be a douche. It has nothing to do with it being "only 8 dollars" and it has everything to do with "doubling their price if you want what they're already giving you, and also we're gonna remove a lot of stuff from our catalogue - but you still gotta pay us double for the 'whole catalogue'.

Re:Just got the official email about this

[Anonymous Coward]

He actually means that we're done with [downward] price changes, it will only get more expensive from here...

Re:Just got the official email about this

[rollingcalf]

It's not about breaking the bank, it's about whether the extra $8/mth would better spent on other entertainment options. With the price increase, many people think it's a better deal to downgrade or drop Netflix, and use the savings for Redbox rentals or video games.

Re:Just got the official email about this

[orgelspieler]

Maybe it's not about breaking the bank. Maybe it's about getting a better value for that $8 with some other service.

Re:Just got the official email about this

[Myopic]

Other people who replied have correctly deduced that $8 per month isn't too much for me to AFFORD, it's simply too much for me to WANT TO PAY. The question isn't whether I have an extra eight dollars in my budget -- if I didn't, I wouldn't even spend the first eight dollars on silly moving pictures. The question is how much are the moving pictures "worth" to me, and if the price is more than the worth, then I don't pay it. I had the one-and-one plan for ten bucks; the "worth" to me I figured was about twelve bucks; so when the price went to sixteen bucks, then that was no longer "worth it". And my twelve-dollar value is much lower than the average person's value for moving pictures, because I like them less than average.

I don't have cable internet, nor dish or anything like that, nor Hulu, and now no longer Netflix.

Re:Just got the official email about this

[Anonymous Coward]

...and he's setting himself up to be a hypocrite

So he is planning to change the prices he charges himself, while not changing the prices for others? Maybe you should look up the meaning of the word "hypocrite".

Re:Waah waah

[g051051]

The increase in cost affected my service, as it caused me to get less service. The continued changes to the web site affected my service, because it made it more and more difficult to search for and find content I was interested in (regardless of whether it was DVDs or streaming. I'm not buying DVDs or Blu-rays, because it's just not that important to me to see movies. It was certainly nice to be able to enjoy the occaisional movie at home, without having to fight crowds at the theaters, but my life doesn't revolve around TV and movies (at least not anymore) so I can easily say goodbye to NetFlix and just not replace it with another service.

If their model works for you, then by all means, keep subscribing. It doesn't work for me though, not anymore, so I'm voting with my wallet.

Re:Waah waah

[nedlohs]

Most likely yes. The $30 million they are paying Dreamworks to stream Shrek would pay for a lot of postage (and DVDs).

Re:Waah waah

[pixelpusher220]

Actually, it is more expensive to stream. Not because of physical transportation/shipping costs but from the licensing costs the studios require for streaming.

Good

[Botia]

It's good to see them making some good decisions. I was getting very worried at the path they were headed down.

Institutional ineptitude

[tverbeek]

I've been saying for a while now that Netflix was systemically incompetent. Their web site redesign - and the boneheaded defense of it - the price hike/split of streaming and DVD plans - and the brain dead attempt to spin it as "lower prices" - the decision to split the company - and the seemingly psychotic announcement of it in an "apology" email... all demonstrate that Netflix just doesn't have smart, qualified people running the company. It shows that they have been successful not on the merits of their business qualifications but by the luck of having the right business model at the right time. The fact that they're backing off from this split of the company doesn't argue against that; it just shows that Reed Hastings doesn't need to be institutionalized for his own protection. Probably. Mark my words: Netflix will be dead (or irrelevant) in five years.

Re:Institutional ineptitude

[Anonymous Coward]

I think it's the other way around. not-smart isn't the problem not-wise is the problem.

  Netflix hires very aggressive and ambitious and smart people (there's a pdf/presentation of their hiring and corporate culture somewhere on the web). The problem is that all the go-getters inside want to Do Something (to justify their existence) and unless they have Something Big To Do, they know they'll be fired right away.

So they come up with various things to do which satisfy all the internal buzzwords & projects. And lots of them are worse than doing nothing, but doing nothing doesn't justify anybody's bonus.

Why Netflix did it in the first place

[goombah99]

I think that there are probably two really good reasons Netflix saw the breakup as a good idea and neither of those has changed.

1) Ending studio blackmail.
Right now studios have to sell netflix DVDs at a reasonable price since they are available over the counter. But the studios don't have to sell them streaming at a reasonable price. They can tell Netflix, give us a slice of your DVD income or we wont sell you the streams you need. If you physically split the bussinesses then the blackmail goes away since they can't clawback any of that DVD income.

2) Redbox is a better model. No postal fees. Just a driver who shuttles a stationwagon load of the disks up once a day or week. No people to tear open envelopes and sort the DVDs. Not even electricity bills. Bussinesses will even pay you to put your machines in their stores. No lost DVDs-- the consumer pays.

Re:Why Netflix did it in the first place

[NeutronCowboy]

Redbox might be a better business model, but their worse from an end-user perspective. Their selection, as of now, sucks. No classics, barely any foreign movies, and I actually have to truck out to a store to get and return movies. My mailbox is much closer, and a dropbox is closer than a store.

The DVD portion of the business model is going to carry Netflix for quite a while. They'll need the income that it provides if they wan to survive the streaming wars. It's a lot easier to build a scaling streaming cluster than it is to create a nationwide physical distribution system.

Re:Why Netflix did it in the first place

[Grizzley9]

Their selection, as of now, sucks. No classics, barely any foreign movies

To you maybe, not to most, because the majority of people want to see new movies, not classics and most foreign movies are a niche market.

Re:Why Netflix did it in the first place

[NeutronCowboy]

I guess I use Netflix in a different fashion then. For me, Netflix replaces the TV. I turn to Netflix if I want some entertainment. And shows and movies are good regardless of when they were created. On the other hand, Redbox seems to be great for people who want to be part of the current pop-culture trends. Although if it's so important to watch the latest releases, why not just watch them at the movies?

Maybe I just don't understand Redbox, but I don't see what it offers me when I already have movie theaters and Netflix .

Re:Why Netflix did it in the first place

[alexander_686]

It’s not that RedBox doesn’t want to carry classic and foreign films, it that boxes are limited to a couple of dozen titles. They, physically, have to carry fewer films then the local Blockbuster location and much less then Netflix – which is the size of a warehouse.

If you can only carry 100 titles, you are going to carry the top 100, focus on rapid turnover, and squeeze costs – which for some people is exactly what they are looking for.

Re:Why Netflix did it in the first place

[mordenkhai]

You replace TV with Netflix, and you maintain a relationship with the theater. My brother and his 4 kids have TV and replace the theater with Redbox. I myself don't use Redbox because I love going to the theater but I don't have a gaggle of children to incorporate into a theater trip. I think that's the thing about Redbox you weren't quite grasping, that for those who want the top 100 and newest titles only, it is a theater replacement, not TV replacement. I think that is how the Redbox model differs from Netflix beyond nuts and bolts, but conceptually. Just a thought.

Re:Why Netflix did it in the first place

[NeutronCowboy]

Ah - that would actually make sense. A family trip to the Theater could quickly run $100, once you add in concession food. For me, the theater is still only $20, and less if we have coupons.

Re:Why Netflix did it in the first place

[Anonymous Coward]

I drop my Netflix returns into a "blue box" and a driver comes at some point an picks them up too.
Plus its extra lazy, you have to go to a red box kiosk and pick them up, but Netflix discs show up in the mailbox.
For an impulse pickup I think red box works for some.

Re:Why Netflix did it in the first place

[jbolden]

This analysis was done in the days of video stores but..

While the vast majority (like 90%+) of rentals are new releases and porn people choose their video stores based on a wide range and selection. People consider access to foreign movies, classics, indys.... very important even though they don't choose to watch them very much.

Not about customers from the beginning

[w1nt3rmute]

This whole thing is some investment bank's brainchild that Netflix swallowed hook, line, and s[t]inker. In early 2011, it was "Hey guys, we can split up your sleepy, high-margin, but declining revenue base DVD business from your sexy, higher cost, but explosively growing streaming business so you can monitize them both more efficiently in the capital markets (and make a ton of money on the options you get converted into on the new business)." In late 2011 it's now "Sorry guys, the major indices are off 15%+ and the multiples have shrunk considerably. We should scrap this idea. The bright side is that your customers didn't really want it, anyway." Spin, baby, spin.

New Service

[hduff]

The will call the new captive service "hipster" and it will wear skinny jeans, appeal to the clueless masses.

Reasoning behind it...

[poofmeisterp]

Looks like it was simply an attempt to figure out the answer to the ultimate question:

"For which reason do people set their accounts up in the first place; for DVD rentals or for streaming?"

They know that you can choose to do both, but it would be beneficial to see which driver really motivates people to sign up with them. That would help them deal with the losses they have experienced by promoting the thing that people want the most. That isn't such a bad thing.

The end result is that they realize and ACCEPT, unlike many other companies, that, "We're screwed if we do and screwed if we don't."

I respect them for that, as well.

Now, they need to innovate. Provide something that is unique and wanted / in high demand.

The end killer is that I started with Hulu. I'm happy with what Hulu provides. When Netflix has something that I want to see, that Hulu does NOT have, I would like to be able to pay for single-views. In other words, I don't want to establish an account just to see something I wanted to see. I want to pay to see it, then not have to worry about cancelling my account at the end.

Institute that, Netflix, and I'll buy stuff from you. That is, of course, if you have it available in the first place. That's another key: good selection.

Re:my life doesn't revolve around TV and movies

[DocSavage64109]

It was certainly nice to be able to enjoy the occaisional movie at home, without having to fight crowds at the theaters, but my life doesn't revolve around TV and movies (at least not anymore) so I can easily say goodbye to NetFlix and just not replace it with another service.

If their model works for you, then by all means, keep subscribing. It doesn't work for me though, not anymore, so I'm voting with my wallet.

I was wondering if that's where you where going with this. I completely understand, and have done the same thing with my music dollars back when they started copy protecting cds. In fact, I may well go to a 2 dvd plan, as I doubt I've seen 16 movies in the last two months.

Will they still add games?

[Anonymous Coward]

No where does it say if Netfilx will still add Games to their library.

If they did, I'd be willing to add 1 more disk to my plan and drop Gamefly altogether. Maybe netflix could get me a game faster than the 8 day turnaround time it takes Gamefly.

Re:Waah waah

[jedidiah]

I have reduced my service.

I have created a RedBox account.

If the whole RedBox thing works out, I might cancel Netflix entirely.

Re:I can't believe people use redbox.

[DocSavage64109]

Maybe some people like higher quality video than streaming can provide over their internet connection? Try not believing when streaming at least matches the quality of bluray.

Re:Waah waah

[Sancho]

Streaming + DVD was a good deal. DVD alone for $8/mo isn't, because Redbox is $1/disc (I rarely get 8 discs a month, and when I do, a lot is just filler that I either don't end up watching or only ended up in my queue because I felt a need to get my money's worth out of the service.) Streaming is a steaming pile for $8/mo, because the selection is so terrible.

When Netflix announced the change, I moved to Redbox. It's only a little less convenient, but there are three kiosks within walking distance and several more on the way to and from work. I already had Amazon Prime, which has a high degree of overlap with Netflix for streaming content. I am in the 4% (who left Netflix when they started charging more.)

Re:Waah waah

[Anonymous Coward]

Not according to Netflix. That's the entire point for all their changes. According to Netflix, streaming is FAR more cost effective with dramatically fewer headaches. DVDs are easily scratched and broken. Their packaging is not as effective as they'd hoped. They wound up having to renegotiate their shipping with USPS because of their shipping issues. Plus they have physical media costs which absolutely must be periodically replaced.

The fact of the matter is, stream generates more revenue with fewer workers, less overhead, and happier customers. Their intention was to maximize profits with with their streaming service while continuing to push people from physical media to streaming so as to allow for a steady stream of growth and increased profits. In a nutshell, the plan was for streaming to subsidize physical media as they pushed people away from physical media. Basically absolutely nothing you said is even remotely close to reality or statements repeatedly made by Netflix themselves. Not really shocking given this is slashdot. Those who know the least are generally those who can wait to share their ignorance with the world.

Funny SNL Netflix sketch

[Faizdog]

This past episode of Saturday Night Live had a REALLY FUNNY sketch skewering Netflix and how fast they seem to be changing course and announcing new plans. It was unfortunately cut for time and didn't air, but is available on NBC's website:

http://www.nbc.com/saturday-night-live/video/netflix-apology/1359563

It was the first thing I thought of when I read the Netflix email this morning. Very funny, apt and appropriate. Almost makes me respect SNL as being on the cutting edge again.

Re:Funny SNL Netflix sketch

[evilviper]

Very funny, apt and appropriate. Almost makes me respect SNL as being on the cutting edge again.

Yeah, changing netflix into nutflix, that's the best of SNL right there. Real first-class social comentary. How do they do it?

Excuse me while I resume ignoring everything SNL until someone finally puts it out of its misery.

Dumpster

[thomasmoreorless]

Dumpster: the new service for cleaning up after a mess like Qwikster.

Taking a stand.

[Anonymous Coward]

I, for one, will not be cancelling my Netflix subscription. It has brought my entire family a lot of good times when they needed them and I don't care if the price goes up.

mfw

[Anonymous Coward]

FALCON PUNCH!!

Re:my life doesn't revolve around TV and movies

[g051051]

Hah! I doubt I've seen 16 movies in the past year!

This about-face was NOT about the customers

[Anonymous Coward]

This about-face was about $100,000,000 for Reed Hastings. It had NOTHING to do with the customers. At least not directly.

Reed owns just over 1 million shares of netflix. That netflix stock dropped by roughly $100/share (from roughly $220/share to roughly $120/share) since the qwikster announcement. Reed was looking at a $100M loss in net wealth. That's why he reversed course. True, the threat of customers leaving is what drove the stock down. But that bit about realizing the customers would be inconvenienced by two websites is pure B.S.

Unfortunately

[killmenow]

While it's refreshing for a CEO to be willing to admit mistaktes, after other recent boneheaded moves this comes across a lot more like: "Hi. My name is Reed Hastings. I have no idea what I'm doing."

Still Not Listening

[Jason Levine]

When they announced the Netflix split, most customers thought it was a horrible idea. So, when they announced that the split wouldn't happen, what did Hastings have to say about it?

"There is a difference between moving quickly - which Netflix has done very well for years - and moving too fast, which is what we did in this case." Source: http://www.hollywoodreporter.com/news/netflix-yanks-plan-separate-dvd-246082

Hastings thinks they just moved too fast. In other words, he still thinks a split is a good idea, but they just did it too quickly. The customers say "Don't do this!" and Hastings replies "We're listening to you and will do this slower."

Can we get someone with a clue in there?

Re:Still Not Listening

[jfengel]

It's possible that the split makes some sort of long-term sense. I can't even begin to fathom what that sense is, though if I had to guess I'd say that it had something to do with making nice with the studios. That doesn't make sense, but then, the studios have this bizarre hatred of streaming that doesn't make sense either, so maybe the two things have the same root.

Even if that's the case, though, you need to get your ducks in a row before ditching the disc business. It's only a win for customers if it gets them better streaming content. They prepped the customers for it by separating the pricing plans. That came with a price increase as well, but I think that the separation of the plans was the real goal.

Without that, splitting the business comes with downsides for the users and no upside. Get the upside (more streaming movies) and you'll get customers squawking, but not necessarily running away. Sell them the downside prematurely and you lose a million customers.

That's not just "slower" but "more fully worked out". Hastings may well think that he's in a better position to cut deals with studios, but he hasn't said so, and even if he did say it we're in no position to believe him.

3 Pitches for Price Increase

[retroworks]

"We raised your prices for rentals, but, we explained it". Damn, didn't fly... hmm. Ok, try this...

"We raised your prices for rentals, but, we called it another name and wrapped it in top management-ese explanations." Darn, still losing them!

"We raised your prices for rentals, and now we aren't going to change the name etc., because we listened to you" That should do it... Keep fingers crossed, this may just work...

Already canceled

[Moof123]

Thanks, but you already wore off your charm. Our household already canceled a few months back. We're back to just buying a DVD now and then from the bargain rack. Your streaming service was weak, and frankly we'd reached the point where we really weren't watching the discs much anymore. I was particularly frustrated that weeding through the piles of crap selection to find last seasons blockbusters had become too tedious. New releases was too full of crap I had never heard of, and frankly never wanted to hear of.

So long.

Best of all - didn't send to us who cancelled

[Anonymous Coward]

I cancelled 3 DVDs at a time plus BluRay the day of the Qwikster announcement, but kept the streaming. Still haven't received this email from Netflix.

There was Likely a Vision

[Anonymous Coward]

I think Reed Hastings and his crew had a vision for moving internet streaming forward and forking off the DVD business was a necessity for that. I'll only be able to wonder what could have been because you self entitled internet whiners ruined it for the rest of us.

April Fools!

[Unreal One]

Sadly the Quikster fiasco was not simply a /. April Fools day mock post; yet worthy of it!

Re:Waah waah

[pixelpusher220]

Netflix said streaming was the way of the future and I don't disagree. That doesn't mean it's 'cheaper'.

You rightly point out the multitude of costs associated with physical movie discs. Which I don't dispute. Movie studios are scared shitless of streaming because they see it as 'copying' on steroids.

Much like I could record a song off the radio, which they fought to make illegal before being shot down, they are worried that the tech will get to a point that I can stream a movie and then just record it to my hard drive.

Ala Flash Movie recorders on computers today, this will happen. A physical DVD still required an extra step for people to make the copy. With streaming the copy will just be made as part of the software the person uses. It isn't there yet but trust me it will be before 5 years are up. Now people simply stream once and have it forever in a perfect copy.

If you believe Netflix wasn't profitable before this announcement/cancellation I've got a bridge to sell you :)

Already dropped my DVD

[Anonymous Coward]

I've already dropped my DVD subscription and might drop streaming in a couple months after I finish watching some specific shows.

It was the combination of the two at a single low price I found attractive. I don't see me going back to them unless they restore the original pricing or within $1 of the old pricing.

So, wait...

[Anonymous Coward]

From Hasting's Sept 19 2011 email:

I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices.

Hasting's Oct 10, 2011 email:

This means no change: one website, one account, one password... in other words, no Qwikster... we are now done with price changes.

In other words, they've abandoned the original reason for raising prices, but are doing nothing to restore them.

Reading the tea leaves

[ThatsNotPudding]

The deal to sell the physical disc operations to Amazon fell through.

Netflix needs to make one more change

[alispguru]

They should stop removing content from their streaming index. If they have to stop streaming something because a license expires, their index should change the "Play" button to "Can't Play Right Now", and pushing or hovering over the button should pop up a window saying who owns the content, how the license changed, and HOW TO CONTACT THE CONTENT OWNER to request Netflix licensing.

Right now, as far as the customers are concerned, Netflix is the one hitting them over the head with the 2x4, and Netflix needs to make it clear to the customers that they're holding the stick, but the content owners are pulling the strings.

Re:Netflix needs to make one more change

[roothog]

The content providers *are* willing to provide streaming content, the disagreement is over price. If you asked Netflix customers to contact the providers directly, the providers will just reply that Netflix is unwilling to pay a fair price for their product. The issue is that there seems to be no way to determine "fair price" of media content.

Re:Waah waah

[Anonymous Coward]

Those who know the least are generally those who can wait to share their ignorance with the world.

Dammit, you were doing so good, then u fucked up the quote!

-@|

What about games upgrade??

[Anonymous Coward]

Are they still adding games? Here's the quote from the original announcement email I received from Netflix:

"One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done."

The new email mentions nothing about this. I'm going to seriously be thinking about canceling if they fall back on this promise.

Re:my life doesn't revolve around TV and movies

[Belial6]

Hah! I doubt I've seen 16 movies this week!

Oh...wait...That's now where were were going, was it?

Re:Too little, too late; cancel not drop DISH

[foolish_to_be_here]

Nope, we are not dropping the mindless drivel of Dish Network but will cancel. Same as we did with Netflix DVD's during this last summer. It sounds so dramatic to "drop the service". If we find we miss it (Dish) we will resubscribe with a reduced package. From their end they just toggle a bit, right? Fall is here and we plan to add back DVD's. We just haven't yet, but plan to when time allows.

Re:Waah waah

[Jumperalex]

Um ... yes it is based on the costs to license the streaming rights vs buying + shipping a DVD. At least according to most "pundits" and I believe even Netflix itself (no, I don't have a citation because I'm lazy ;) )

bumbling?

[Anonymous Coward]

I think they figured out how to do dvds by doing the obvious thing and being the first to market, but they still haven't figured out how to do streaming any better than anyone else. If they had eased up the prices and slowly rolled out the separate charged for streaming over time with some better PR language than Reed could come up with himself they would not have lost so many. I'm sure millions were like us in that we have always had the 3 dvd plan, but could easily go down to 2 or 1 and hardly notice if we were more cost conscious. Well we woke up when then changes came and downgraded our plan. Our internet connection at home is borderline too slow for streaming, and the streaming selection sucks. There are lots of other players in the streaming business, even though they all have some serious drawbacks.

They need to dominate the dvd business for at least a few more years because they won't have customers until they have more selection and everyone gets more bandwidth, and the bandwidth expansion is inevitable; The hollywood IP hoarders will have a much harder time letting that bigger selection out.

Re:Waah waah

[c0d3g33k]

Now people simply stream once and have it forever in a perfect copy.

I doubt that. More like a "good enough" copy - if you think streamed video is perfect you haven't been watching closely enough. Ripping from a stream is more analagous to a radio-to-cassette or tv-to-vcr copy back in the day. Yeah it's better than those now, but still quite inferior to a pristine digital copy. Good enough for many, but not good enough for those who care. It's easy enough for the streaming providers to throw in enough artifacts or other subtle degradations into the stream that leave it watchable but still unacceptable for those who want a good copy to "keep forever". I think the rights holders should give up their fear of stream-ripping and just treat streaming as what it is: a modern version of radio or broadcast television. The opportunity to sell "perfect" copies to those who care via file download (with verifiable checksum) or physically via the latest memory card or stick still exists - the formula still works even if plastic disks aren't what people want to buy any more.

The CEO needs to be fired. He's a fucking idiot.

[Anonymous Coward]

The CEO needs to be fired. He's a fucking idiot.

Re:Waah waah

[pixelpusher220]

You are correct about 'now'. I was speaking hypothetically about 5 years from now. If it's an HD quality signal, it can be saved as such.

They were trying to make Netflix more like Chrome

[Anonymous Coward]

... oh wait, that's Firefox.

Re:Waah waah

[bill_mcgonigle]

When Netflix announced the change, I moved to Redbox. It's only a little less convenient, but there are three kiosks within walking distance and several more on the way to and from work.

If you use Netflix for renting new releases, this is a fine comparison, but many people use Netflix for their broader library. Just this weekend, we tried to watch the recent Harry Potter film (from Netflix) and found that we needed to understand the previous one, so we looked on the Redbox site and it wasn't available at the half-dozen Redboxen in our area. Netflix had it, but we wound up streaming it from Amazon ($) for convenience (the Redboxen are $3 in gasoline away - USPS covers that cost for us with Netflix).

And forget about getting a classic movie education from Redbox.

I already had Amazon Prime, which has a high degree of overlap with Netflix for streaming content.

Prime free videos has some things Netflix doesn't have (which I enjoy), but in total they can't even have 5% of the content Netflix does. I can't see how that can be considered a 'high degree' of overlap. If you meant including the pay-to-stream library, sure, they have more streaming than Netflix, but if cost doesn't matter then it's not a fair comparison for most people.

Re:Waah waah

[Sancho]

I've had Netflix for several years, so I've seen most older movies in their library that I'm interested in. I certainly recognize that may not be the case for everyone.

As to streaming, I could only base that on my experience. When I look to see if something is available for streaming, I look(ed) both places, and my results usually matched up. Netflix may have vastly more selection in movies/tv I'm not interested in watching. Nevertheless, I don't think I'm alone in finding the selection wanting. It's a common complaint and the most oft-cited reason I've seen for people canceling that portion of the service.

Emphasis is on WRONG factor

[Geotopia]

Back in July, when I first heard of "Quikster", it almost didn't register, it was such a stupid name. I thought it was just an internal code name and never imagined that it would be used publicly. Why would such a strong brand like Netflix use such a cheap sounding site for DVDs!? Why the need to totally spin off the DVD (physical media) business? The theory of soliciting the sale of the streaming services to Amazon (it already runs on AWS) adds some logic to that.

But the bigger picture was hidden in the many news stories of late, namely the end of the Starz contract. It will effectively cut their title lineup in half, removing not just a quantity of titles, but reducing the quality of titles available. The studios are getting greedy and the historical success of Netflix, licensing content at affordable terms, is seriously in question. Unlike Apple that could subsidize iTunes in order to ride out petty threats from Music publishers to create a ubuiquitous store front that publishers can't ignore, Netflix has no alternative stream by which it can subsidize a 3 or 4 year trade war with the studios. Under Amazon, subsidizing a long stretch of losses to generate critical mass against the studios, Netflix would have a chance, but Amazon has its own media platform and owns the network across which Netflix runs.

Thus, an AMZN buyout at today's price, even though it's nearly 1/3 of its peak, is unlikely. AMZN would be smart to just keep running its service, charging Netflix for its use of its cloud infrastructure services, and buy up NFLX when it's dropped another 50% if NFLX still has licensing rights to any significant content. When it's all over, we'll see just how powerful the content producers are over the content distributors.

Re:Emphasis is on WRONG factor

[LrdDimwit]

They said as much in one of their blog posts where they tried (poorly) to explain why this was necessary. It's really quite simple: They don't want to be the next AOL.

Remember when AOL bought Time Warner? Yeah, that was craaazy, wasn't it? And where are they now? Plummeting like a rock from those amazing heights. They've been basically irrelevant for years now. So what happened?

They were a market leader, in a market being disrupted by new technology (broadband). They looked at the new technology, then looked at the river of gold they already had, and said "Hmm. If we switch to the new tech, our costs soar, and we cannibalize our existing money press." So they fell victim to one of the classic blunders: they played for short-term gain at the cost of long-term ruin.

AOL was one of the few ISPs large enough to take advantage of an opportunity that existed then. Before the business model solidified for cable and DSL, there was an opening for an ISP to partner with the cableco and telcos. Broadband would have been AOL and the infrastructure companies.

Instead, they went it alone. AOL's opportunity evaporated. They tried offering AOL-branded broadband far too late, and abandoned the experiment shortly. This doomed them to oblivion as an ISP.

Netflix really really wants to avoid repeating this mistake. As they noted in their blog post - companies make this mistake all too often. DVD by mail is doomed, and it has precisely the same weakness as DVD by rental store (which Netflix just chewed up and spit out): It will be out-competed by more efficient, superior technology. Streaming is going to destroy DVD by mail. It's cheaper and more convenient.

The entire Qwikster thing only makes sense if you assume Netflix planned to jettison Qwikster. It's easier to jettison a division if you've already separated out the dependencies. Why else would they have contemplated such a silly move?

As for why Netflix would want out of DVD-by-mail sooner rather than later -- They can get a lot of money for selling the business while it's still got a huge install base. If they wait until years after the erosion starts after they've already lost a third of the users, it will sell for a lot less.

Re:Emphasis is on WRONG factor

[Geotopia]

Good analysis, many salient points.

It's true that Netflix needs to move on from DVD-by-Mail in order to remain relevant. However, they do damage to that business by expressing the self-doubt that came out loud and clear through all of this Quikster (such a stupid name!) mess. They confused their customers AND any potential suitor to buy the business unit.

But the elephant in the room isn't DVD-by-Mail or even a new distributive technology, it's the Studios who are starting to play hard ball now that their post-box-office DVD sales are in decline and BlueRay is stalling. They now look at streaming as a major distribution channel rather than a sideline revenue stream. They aren't entering into/renewing contracts that make business sense for Netflix, which is why Netflix's costs are going up while available content will diminish over time. In the end, the major Studios are getting greedy and as a result, they'll take a hit in the wallet while the viewing public will start looking to other forms of entertainment (and there are lots of them).

in other words...

[Anonymous Coward]

the guy that has that twitter username wanted too much money so netflix is just dumping the whole idea.

Then the "Can't Play Right Now" message ...

[alispguru]

should be of the form:

To Relicense This Show, We Would Have To Raise Your Monthly Streaming Fee:

                (change in yearly license fee) / (number of subscribers) / 12

Easy to compute, unbiased, and would separate the reasonable content owners from the greedy unrealistic scum

They killed more than that

[N1cole]

Their changes made many of their subscribers mad, but they also may have caused future subscribers to forever doubt them as a trustworthy company. The Blockbuster Movie Pass was released earlier this month and has already become a huge hit with DISH Network subscribers. Adding the pass to my own employee DISH account has opened up so much entertainment for my family and me. We did end up closing down our Netflix account just because we're getting streaming, DVD/Blu-ray exchanges with the Pass, plus we now have the added feature of renting video games. For the $10 a month I'm now paying for more, Netflix can keep their confusion.