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Netflix Creates Qwikster For DVD Only Business

samzenpus posted more than 3 years ago | from the judgement-of-solomon dept.

Businesses 481

Frankie70 writes "Netflix CEO Reed Hastings just dropped a bombshell. In the wake of a rapid decline in Netflix's stock price last week, Hastings is taking a bold step by separating the DVD and video streaming services. The DVD-by-mail service will now be called Qwikster, and the streaming service will maintain the Netflix brand."

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Incoming bitchy comments... 3.. 2.. 1 (-1)

Anonymous Coward | more than 3 years ago | (#37439698)

after all, bashing netflix is the new cool thing.

Re:Incoming bitchy comments... 3.. 2.. 1 (0)

digitalsushi (137809) | more than 3 years ago | (#37439910)

Whoa -~! You nailed the timing on that bro! You are the world's first digital soothsayer. I read your post and went into hater mode, but dayum son you have this site pegged.

Not really. Bashing stupid has... (1)

EzInKy (115248) | more than 3 years ago | (#37440182)

...has been a cool thing since forever.

Re:Incoming bitchy comments... 3.. 2.. 1 (1)

MightyYar (622222) | more than 3 years ago | (#37440200)

I'm not going to bash Netflix, but I will say that it's been a while since I've seen the complete destruction of a very well-regarded name brand.

Maybe the IBM PC?

Can you imagine Coca-Cola changing their name? McDonalds? Apple? Why work so hard to build name recognition for a service and then toss it in the garbage?

Qwikster's website very Fruedian (-1, Offtopic)

Binestar (28861) | more than 3 years ago | (#37439702)

Well, vagina-like anyways.

What an unfortunate name... (2)

garcia (6573) | more than 3 years ago | (#37439704)

All I can keep thinking when I see that name is 'Quixtar'.

Re:What an unfortunate name... (1)

nine-times (778537) | more than 3 years ago | (#37439826)

This new business venture seems a little Quixotic.

Re:What an unfortunate name... (3, Interesting)

Manuka (4415) | more than 3 years ago | (#37439876)

Glad I'm not the only one that thought that.

Naming your company something that sounds like a failed Amway rebranding: FAIL #1.
Not checking to see who was using that brand name as a twitter ID: FAIL #2.

I'm guessing that the CFO recommended spinning off the DVD business ASAP before it bled the entire company dry. I give it 9-12 months.

Re:What an unfortunate name... (1)

yotto (590067) | more than 3 years ago | (#37440138)

@Qwikster on Twitter is not being actively used. Fro all I know, Reed Hastings owns it.

Re:What an unfortunate name... (4, Insightful)

Anonymous Coward | more than 3 years ago | (#37439880)

Yeah, not too sure I like the name myself either.

Why not something similar to Netflix to make it easier to find?
Qwikflix sounds much better.

Re:What an unfortunate name... (1)

Sponge Bath (413667) | more than 3 years ago | (#37439926)

They could chose the name Q*bert and have customers choose discs on a pyramid of cubes. It would make as much sense.

Really? (0)

Anonymous Coward | more than 3 years ago | (#37439706)

You're going to cheapen youself with a 'ster' name? Really?

Re:Really? (5, Insightful)

Kjella (173770) | more than 3 years ago | (#37439832)

You're going to cheapen youself with a 'ster' name? Really?

And the misspelling of Quick as Qwik... this has all the telltale signs of a 50yo CEO listening to 30yo consultants about what a 15-20yo would find "hip" and "cool". The cringe factor of doing it at least ten years too late is overwhelming.

BIG Mistake (3, Insightful)

phorest (877315) | more than 3 years ago | (#37439716)

Nothing like killing off your brand in a hasty fashion. Although I'll be curious to see how they do this I doubt I'll be sticking around much longer.

Re:BIG Mistake (1)

ByOhTek (1181381) | more than 3 years ago | (#37439810)

Actually, I wonder if the reason is that half of it is losing money at a horrible pace, and by splitting the two, they can hopefully allow half the ship to keep sailing.

Re:BIG Mistake (1)

omnichad (1198475) | more than 3 years ago | (#37439992)

Which half? Streaming, to me, looks like the sinking ship. Once the content producers realize how successful Netflix has been, they'll all be demanding higher rates. Then, Netflix is going to cost as much as cable, often delivered over cable Internet to make it even sillier.

Re:BIG Mistake (1)

truthsearch (249536) | more than 3 years ago | (#37440068)

I think it's the opposite. Netflix is clearly putting everything down on streaming since that's what kept the household name. By showing content owners that the streaming subscriber base is much smaller than the DVD base, they'll be able to negotiate better deals for streaming content. Theoretically each service will have costs and prices that better reflect whose using them.

Re:BIG Mistake (1)

JeffSh (71237) | more than 3 years ago | (#37440230)

Why would they have to split into 2 different brands to show content providers that statistic? Doesn't make sense to me.

Re:BIG Mistake (2)

gatkinso (15975) | more than 3 years ago | (#37439816)

Well, if you think about it "Netflix" is more apropos for a streaming service as opposed to a mail order business that happens to be conducted over the web.

"Diskflix" would have been much better tho. Quikster?

Re:BIG Mistake (1)

DarkOx (621550) | more than 3 years ago | (#37439918)

Right and the "flix", in something like DiskFlix, would have some brand recognition, which leads me to think that the experience with the service and or expected outcome for the business is not something they *want* associated with their brand.

Re:BIG Mistake (1)

truthsearch (249536) | more than 3 years ago | (#37440092)

The newly named service includes video games, so "flix" would be a bad choice.

Re:BIG Mistake (1)

Anonymous Coward | more than 3 years ago | (#37440264)

What about 'DiscShitter' then? That would open them up to everything disc-based.

Re:BIG Mistake (1)

iteyoidar (972700) | more than 3 years ago | (#37440018)

That's probably what they want, trying to get people to move away from mail to the streaming service. It's a choice between paying for something that sounds all futuristic and internety or something that sounds like a bargain-basement DVD service from Walmart. "BitTorrent" sounds way more futuristic to me though.

Netflix new streaming only model (1)

slashpot (11017) | more than 3 years ago | (#37439726)

I have a qwikster .... in my pants!

Way to make the problem worse (5, Interesting)

Dr.bme (1677344) | more than 3 years ago | (#37439742)

Wow, this is corporate stupidity at its finest. How exactly will this make more people subscribe? The only reason for this is that the CEO is freaked out about a stock drop and is overreacting. If anyone deserves to be fired it is the Netflix CEO. Everyone knows that the most powerful tool in business is brand recognition, and they are just throwing it away. From what I understand most of the people that dropped the DVD service did it because they weren't using it and it was just a good reason to do so. If anything this move will force more people to drop the DVD service as they will lose they que and no one will like having to pay 2 separate bills from same company. Way to go Netflix you just make a small problem much bigger by overreacting. I have a feeling that their stock is going to tank today.

Re:Way to make the problem worse (5, Insightful)

bill_mcgonigle (4333) | more than 3 years ago | (#37439806)

If anyone deserves to be fired it is the Netflix CEO.

This. Who's chairman of the board over there?

They want me to maintain two queues, two bills, kill the functionality of auto-adding DVD queue videos to the stream, kill the prediction service, kill the history service, all because 5% of customers are complaining of the price increase?

The shareholders need to demand new leadership immediately before all of their stock value evaporates.

Well, there's one potential benefit - maybe Amazon will acquire Qwikster and we can be done with the boneheads who have killed the formerly great Netflix.

Re:Way to make the problem worse (2)

omnichad (1198475) | more than 3 years ago | (#37440036)

kill the functionality of auto-adding DVD queue videos to the stream, kill the prediction service, kill the history service

That says it. I'm likely to be dropping streaming once this hits. Netflix DVD was really the only thing that mattered. I like having a one-stop place to look for all the rarer discs (or even popular movies that are never in-stock at Redbox). It was never about renting Rio or seeing the latest college comedy film. I don't really see anyone ready to take over their one-of-a-kind niche. The local video rental place sure isn't it - anything older than 2 years or made outside the USA is nowhere to be seen. And that's not even a chain rental place.

Re:Way to make the problem worse (2)

DocSavage64109 (799754) | more than 3 years ago | (#37439934)

As one of the people that was happy to switch to dvd-only and save a few bucks, now I can't even tell people I use Netflix. I hope they don't expect me to be mentioning watching movies from Qwikster.

Re:Way to make the problem worse (1)

Hungus (585181) | more than 3 years ago | (#37440164)

I doubt it id ton try and get people to subscribe, more likely it is to 'develop' a seperate business line so it can be jettisoned and not as negatively affect stock prices.

Great, yet another "-ster" brand (1)

Anonymous Coward | more than 3 years ago | (#37439758)

They might as well have called it "iQuikster". The whole "-ster" thing is just as diluted as any of the other cutesie Web 2.0 brand conventions.

Did not even think this through? (5, Insightful)

LordKronos (470910) | more than 3 years ago | (#37439760)

This is just stupid, but the worst part is that, it seems to me like they didn't even think through all the implications of they way they are doing this. For example, take the following from the official netflix blog.

User asks: " If a film I search for on Netflix is not available for streaming, will the website still tell me if the DVD is available? Or must I search twice?"
CEO Reed Hastings responds: "ouch. You'd have to search the second place if we didn't have it in the first place."

Ouch? Are you serious? Ouch? To me, that reads like "hmmmm, we hadn't really thought about that".

Re:Did not even think this through? (2)

spamking (967666) | more than 3 years ago | (#37439794)

Wow. Sounds like Netflix should've just stuck with DVD rentals . . . and then created a separate streaming brand in the first place. Would that have even helped?

Re:Did not even think this through? (1)

rwv (1636355) | more than 3 years ago | (#37440082)

And they could call the separate streaming brand.... Mailmovies. Seriously. Netflix. Internet Flicks. Movies delivered over the Internet. Movie Streaming has been their end-goal since Day 1. Mailmovies (or Qwikster) was a means to that end.

On the other hand, it amazes me that they haven't been able to negotiate equitable terms for their mail distribution model verses their streaming business model. The fact that you can't stream all movies in the mail system is bad form.

And while we're at it... why the hell does Hulu Plus have a subset of "Web Only" videos? I want to watch this stuff from my Playstation without doing an end-around to plug the laptop into the TV via HDMI. I pay them money to avoid this workaround. There is enough content to keep this from being a huge issue... but I'd rather have access to the full collection as a paying customer and the freedom to consume it over all of their supported distribution streams.

Re:Did not even think this through? (1)

MobileTatsu-NJG (946591) | more than 3 years ago | (#37440140)

It's certainly possible. We're not privvy to what the studios tell them when they negotiate their fees. I wonder if they were making ridiculous demands by using one service as leverage for the other. "Well, you already have us on DVD, so if you want streaming too you gotta pay even more!"

Re:Did not even think this through? (1)

lpp (115405) | more than 3 years ago | (#37440240)

No. Netflix has a lot of name recognition. Moreover, they've already sent clear signals they were ready to make streaming their major source of operations going forward. So they want to use the already present name recognition for the operations they intend to move forward with. As for the pain to the consumers, DVD rentals were dropping in big markets and were only growing marginally in outlying areas (flyover country). The big markets are where you're more likely to have a higher concentration of high bandwidth customers willing to make use of streaming. And the flyover areas are less likely to have that bandwidth, and so probably weren't making as much use of the streaming to begin with.

So I imagine what they were seeing momentum wise was a silo effect for most customers, where they used either DVD or streaming but not always both. Yes, there was clearly an uproar for those users who used both streaming and DVD, but while the loss of 4% of their user base was significant, it clearly wasn't a death blow. And now if the DVD business starts to dry up as high speed access is made available in more areas and as more content is available for streaming, it won't suck the life out of their brand because it's off in another company altogether.

I wrote about it on my blog, if you're interested. [pyehouse.com]

Worthless Queues now (1)

omnichad (1198475) | more than 3 years ago | (#37439822)

I add movies to my DVD queue now and they magically sometimes appear on my Instant Queue without any effort on my part. I don't search for streaming content. Their catalog isn't that extensive. Sometimes I browse, but I never search it.

This might make me cancel my streaming service. I kept both during the price transition.

Re:Did not even think this through? (2)

elrous0 (869638) | more than 3 years ago | (#37439892)

At least with the price increase, there was some justification for it. This move just makes it a bigger pain in the ass for customers, for no good reason.

Unless they're planning to sell off one or the other service, I can't figure out what they're even thinking by this dumbass move.

Re:Did not even think this through? (1)

phorest (877315) | more than 3 years ago | (#37440166)

Unless they're planning to sell off one or the other service, I can't figure out what they're even thinking by this dumbass move.

Maybe it's not too late for Blockbuster" to be popular again by buying "Qwikster"

Re:Did not even think this through? (1)

marcop (205587) | more than 3 years ago | (#37440086)

Does that mean separate ratings for the DVD site as well as the streaming site. Who knows what other features are now separate.

Sounds like a stupid move.

trade up netflix for apple TV (2)

alen (225700) | more than 3 years ago | (#37439766)

i only have netflix streaming because my older kid always likes one or two shows on it that makes it worth it over buying the dvd. otherwise the selection is so bad there is nothing to watch.

with apple's new rules i can just buy and stream from the apple tv and dump my cable DVR as well

Re:trade up netflix for apple TV (1)

elrous0 (869638) | more than 3 years ago | (#37439944)

Except nothing even comes close to Netflix streaming. Apple's is more akin to pay-per-view than Netflix streaming, and is ill-suited for TV series (Netflix's strong suite). Hulu is the closest thing out their to Netflix, and their selection is weak by comparison (and you have to put up with ads on top of that).

Re:trade up netflix for apple TV (5, Insightful)

jandrese (485) | more than 3 years ago | (#37440252)

The worst part is that EVERY legit streaming service has weak selection, Netflix is just a little less weak than the competitors (although if they lose Starz content we'll have to see). The major studios have been pretty hostile to streaming (even the original outrageous $8/movie streaming sites) and really we only have it so good now thanks to some rather fancy footwork by Netflix in the early days before the studios really took notice of them.

The DVD-by-mail service is the only sure thing Netflix has. It costs them more, but they're not beholden to studio assholes with it. They just buy disks retail and stick them in envelopes. The streaming business model puts way too much power in the hands of the studios and lets them dick over any competitors at will.

Re:trade up netflix for apple TV (1)

alen (225700) | more than 3 years ago | (#37440272)

netflix is geared to geeks not real people. my wife likes 90210 which is not on netflix last i saw

Also (0)

Anonymous Coward | more than 3 years ago | (#37439778)

They're going to start renting out xbox 360, ps3 and wii games. FTEM (From the Email):

"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."

'Other Improvements will follow' for qwikster, although who knows what other disc-like products they will add, or what the pricing on renting video games will be. Since they're a little late to the video game side of things I would hope that they undercut Game Fly.

Re:Also (1)

elrous0 (869638) | more than 3 years ago | (#37439986)

One improvement we will make at launch is to add a video games upgrade option

Only it's going to cost you extra. Knowing how stupid Netflix has been of late, they'll probably make that extra charge equal to (or even more than) what a Gamefly subscription costs.

This isn't the Yahoo! Stocks boards (4, Informative)

Rogerborg (306625) | more than 3 years ago | (#37439790)

So how about an article that documents the effect on us, the customers, not on speculators and investors?

Here, let me get that for you:

Customers can still subscribe to both, but the two sites will not be integrated anymore. [...] Separating the businesses will also force customers to make a choice

Crib notes: squeal, piggies, squeal.

Re:This isn't the Yahoo! Stocks boards (1)

SirGarlon (845873) | more than 3 years ago | (#37439954)

So, a 60% price increase, followed by a huge downgrade in the quality of the user experience? This is quite a one-two punch to the customer. Ouch, indeed.

It would be different... (0)

Anonymous Coward | more than 3 years ago | (#37439798)

... if they actually had all of the content available for streaming, but as it stands only about 10% of my Queue right now is streamable. I think what would've been easier to digest for the masses would've been an introductory price of like $4/mo. Also, maybe they could've told us a bit beforehand.

All in all I like Netflix and it makes me sad to have to make a hard decision on if I should let them go. Much like a baby bird that once gave me great DVD streaming and rentals, now I have to decide if I should keep my poor bird at double the monthly cost, let it fly away and be devoid of a big part of my media capabilities, or instead cut it in half and have to deal with partial entrails, never quite getting the same experience.

Re:It would be different... (2)

cob666 (656740) | more than 3 years ago | (#37439888)

Much like a baby bird that once gave me great DVD streaming and rentals, now I have to decide if I should keep my poor bird at double the monthly cost, let it fly away and be devoid of a big part of my media capabilities, or instead cut it in half and have to deal with partial entrails, never quite getting the same experience.

I think this is the first time I would have actually preferred a car analogy.

A new name divorced from their core? (4, Insightful)

phorest (877315) | more than 3 years ago | (#37439812)

Why of all things QWIKSTER? Why not MailFlix/NetFlix. Much more in line with the service capabilities.

Dear Reed:
I don't know you and this morning you send me an email telling me you messed up but yet I have never heard of you. I have a feeling you messed up again and didn't think this through. So now I'll need to have TWO accounts? Please reply when you know what you really want to do.

Signed

A new disgruntled customer.

Re:A new name divorced from their core? (1)

trout007 (975317) | more than 3 years ago | (#37440010)

What's great is they don't even know how their users use their service. If these really are two different sites with nothing in common it sucks. I usually first go to Watch Instantly to see if the movie I want is there. If not I can easily add it to my DVD queue.

Re:A new name divorced from their core? (1)

phorest (877315) | more than 3 years ago | (#37440094)

I usually first go to Watch Instantly to see if the movie I want is there. If not I can easily add it to my DVD queue.

I rarely waste my time looking for streamed movies as they are so few in number anyway.
Just try to watch "The Andromeda Strain" as a stream. It's been broken for 6 months.

Re:A new name divorced from their core? (1)

lnx_daemon (451339) | more than 3 years ago | (#37440152)

I was thinking "ShipFlix" and "NetFlix", which also easily transitions to shitflix if you are so inclined :)

Re:A new name divorced from their core? (1)

Bill Dimm (463823) | more than 3 years ago | (#37440214)

Why not MailFlix/NetFlix

I think they are trying to get away from the "flix" part of the name because they are adding games now. Really, the name is the smallest part of the problem. Splitting the websites apart is unbelievably idiotic.

Subject related advertising (0)

Anonymous Coward | more than 3 years ago | (#37439820)

I lolled
http://i54.tinypic.com/fo3uav.png

MPAA Drone (1)

xaoslaad (590527) | more than 3 years ago | (#37439830)

Netflix CEO Reed Hastings has got to be an MPAA Shill planted to destroy cheap internet movie streaming. It's the only explanation. Has Hastings always been CEO of Netflix - I'm too lazy/disgusted to look, but if so I propose either that he has been killed and cloned, or brainwashed early on to be an unwitting sleeper agent, who has now been triggered to commit his acts of espionage. These are the only explanations for this kind of disaster.

Re:MPAA Drone (1)

Kjella (173770) | more than 3 years ago | (#37439984)

He's a co-founder, so I guess it's your "killed and cloned" theory. By the way, don't you mean acts of sabotage or something, not espionage?

Re:MPAA Drone (0)

Anonymous Coward | more than 3 years ago | (#37440122)

I'm not sure if he's always held the CEO position, but he was one of the co-founders of Netflix, so he's been there all along.

Apology??? (2, Interesting)

Anonymous Coward | more than 3 years ago | (#37439834)

"Sorry we screwed you over, so in response we'll make things extremely inconvenient."

Dollar vote people, dollar vote.

Re:Apology??? (2)

SirGarlon (845873) | more than 3 years ago | (#37440024)

Unfortunately there are few viable alternatives to Netflix streaming at this time. Hulu has commercials -- a deal breaker for me. Amazon Prime takes extreme inconvenience to whole new levels. I tried it with my Roku box -- they don't even alphabetize the titles in their catalog! I couldn't believe it. Blockbuster has DVD-by-mail service now their streaming service is immature, and Blockbuster is pricey.

It's more like, "Sorry we screwed you over, but our competitors haven't got their acts together, so we won't, either. Expect more screw-over in the future."

Re:Apology??? (0)

Anonymous Coward | more than 3 years ago | (#37440192)

Yeah, that "New Arrival" of the Flintstones with John Goodman has few viable alternatives...

The best alternative now is bittorrent/usenet/etc. My big problem is the old bait-and-switch tactic they pulled on us. F---k 'em.

So will it still be simple to switch? (4, Insightful)

DarkOx (621550) | more than 3 years ago | (#37439846)

One of the reasons I decided the price hikes were acceptable was that Its "month to month" in that I was going to be able to do the streaming only service, consume the new content there, than switch back to the DVD service for a couple months until they get new stuff available on streaming.

If this makes it hard to do that it further reduced the value to me and starts to make competitors like Amazon and Hulu+ look interesting. I still think Netflix is probably the better value proposition at the moment, even with the price hikes; but if this means I can't easily switch between one type of service and they other, I might have to start looking at other options for content again.

This is a dumb move, all around AFAICT. Its basically an accounting trick to make the EPS of Netflix proper look a little better, investors won't wont be fooled, customers like me will be aggravated.

Re:So will it still be simple to switch? (1)

Talderas (1212466) | more than 3 years ago | (#37439978)

I think the move is smart for Netflix. They're looking at what they're seeing now and what the field looks like in the future. They're looking to cut the disc based business to avoid having it drag down the streaming business. There's a lot of potential out in the future that could cripple the disc-based side of things (look at the current turmoil involved with the Post Office). If the disc-based side goes too far in the red it would drag down the streaming side. They're trying to find ways to maintain profitability in the disc side and you can tell with how they're looking to expand into game discs in addition to DVDs.

It's been pretty obvious to me for awhile that Netflix was looking to divorce the two sides as much as possible. I didn't realize they would straight out split into two companies. I imagine that if they don't use the same databases or servers they will eventually develop the processes to tie them together.

Re:So will it still be simple to switch? (1)

truthsearch (249536) | more than 3 years ago | (#37440216)

To me, such a complete split and a rebranding mean they're looking to sell the DVD business. Otherwise there was no reason to frustrate the users by delinking their ratings, recommendations, accounts, history, etc. Technically they can run on separate servers and share information between them, but they're not even bothering.

Was about to subscribe (1)

mprindle (198799) | more than 3 years ago | (#37439854)

Well, I just got a new PS3 that I'm using for a media center manager and I had planned to signup for Netflix in the next week, but in the wake of this news I'm going to be holding off to see what the heck they are doing. First the 50% increase in the plans and now a complete divergence of the company. I'm sorry I only give money to a company that I feel I can actually get service from and right now that Isn't Netflix/Qwikster.

Great... (4, Interesting)

andymadigan (792996) | more than 3 years ago | (#37439860)

So now when something in my queue is available on instant I won't be able to see that unless I specifically search a different site. (For an 100+ item queue, that's unreasonable).

Now when I'm looking for something to watch, I'll have to check Netflix first, then Qwikster.

I can't even see this as sensible business plan. The world is moving to streaming, so Netflix is going to create a new company that ships old discs? Do they really expect this business will still be growing in 5 years?

Before Netflix split the plans, I had assumed that Netflix would slowly raised prices on the DVD-by-mail service before finally killing it. In the meantime they would work on expanding their content, and lobbying Congress to make it as easy to broadcast video as it is for radio stations to broadcast music (no individual negotiations, just a single company to make payments to).

Instead, their streaming library is shrinking and they're cutting away the DVD business that makes up for it. I think Reed has drank a little too much of the Kool-Aid. He starts out his post talking about how well Netflix works on TVs. Yes, Reed, the software is great, but the selection is terrible. As an addition to the DVD service, it was great and promising, but it's not ready to be its own general market product yet.

Maybe not such a bad move (1)

billrp (1530055) | more than 3 years ago | (#37439862)

The DVD rental by mail business is a dead end, and Netflix can more easily sell it off after they figure out streaming deals. I never understood how they make money - I pay about $8/month for renting a max of 1 DVD, and I get about 2 DVDs by mail each week. That's 8 each month, and with postage/envelopes each way at about $0.50, that's $8.00 - not much profit here. I suspect Netflix wants to emphasize to movie studios that DVDs are a dying business, and to get their streaming act together.

Re:Maybe not such a bad move (1)

pla (258480) | more than 3 years ago | (#37440096)

The DVD rental by mail business is a dead end

A third of the US still lacks broadband. A larger number, including myself, pays way too much for a service that technically qualifies as broadband (satellite, 3g, etc), but have such onerous bandwidth caps (not to mention random but usually short drops in service) as to make streaming movies a virtual impossibility.

It sounds great to say "we have higher margins on this side of the business, let's ditch that old crap", but just giving up on 100+ million potential customers doesn't count as the wisest of business decisions.

That said, I agree with you about the postal overhead for their mailed DVD service, and this hideously-named spinoff will eventually need to figure out how to deal with that problem.

Re:Maybe not such a bad move (1)

Sponge Bath (413667) | more than 3 years ago | (#37440118)

I pay about $8/month for renting a max of 1 DVD, and I get about 2 DVDs by mail each week.

Way back when I had the 1 DVD option, I was lucky to get one disc per week. To get 2 per week, you would need to watch and mail it the day you receive it and hope the USPS is functioning perfectly. 25% were unplayably damaged. Realistically the average person can get 3 playable discs per month if you keep your queue full of unpopular choices that are not back ordered and watch the disc soon after receiving it.

Re:Maybe not such a bad move (1)

truthsearch (249536) | more than 3 years ago | (#37440266)

I agree, except for your postage cost estimate. Like any large mail user they have a special contract with the postal service. They pay less per envelope than we do.

Alternatives? (0)

Anonymous Coward | more than 3 years ago | (#37439866)

So, how do the alternatives stack up at this point? Amazon's VoD vs. Blockbuster On Demand vs. Roku vs....? Especially in terms of title availability?

It's recognizing where video is going. (4, Insightful)

CaptainJeff (731782) | more than 3 years ago | (#37439882)

It's not stupid. It's NetFlix acknowledging that streaming is how people will watch content in the future. They are putting themselves 100% on the bleeding edge of all-streaming with no physical media. Now, there are a whole bunch of people that still want DVDs...and that's why they are still playing in that area at all. However, five years from now, when no one wants DVDs at all, they can just kill Quickster. Meanwhile, NetFlix becomes the dominant king of streaming content, as they can dedicate themselves 100% to that. It's not about innovating both business models anymore. It's about milking the DVD market as it dies while still allowing themselves to focus entirely on the streaming market, which is the future.

No, they are gambling (1)

EzInKy (115248) | more than 3 years ago | (#37440150)

Neflix is gambling on how people will watch content in the future. Seriously, do you really think that five years from now the US will have improved its infrastructure enough to support universal access to downloadable content?

Re:It's recognizing where video is going. (0)

Anonymous Coward | more than 3 years ago | (#37440228)

That in no way explains why they'd remove the integration now, while the streaming isn't up to par yet. Running them as two seperate businesses makes sense, but removing the integration and splitting your brand does not.

Games (4, Informative)

feidaykin (158035) | more than 3 years ago | (#37439894)

Missing from this submission is the news that Netflix/Qwikster will now offer game rentals. I suppose that's not a big deal to everyone. I'm sure gamefly isn't happy about it, but competition should be great right? Personally I rarely if ever rent games, since I tend to play a demo first (and if there isn't one, pirate) and if I like the game I purchase it through Steam, so that I can get up-to-date patches, play online, and have that warm fuzzy feeling of supporting the developers. I wish the industry was more receptive to demos, because they do work, for good games at least.

For example (an off-topic gaming story follows here), I recently watched X-Men: First Class and the American/Soviet ships primed for battle with each other put me in a Red Alert mood. I had never played the third game in the franchise, because when it came out I was raiding heavily in WoW and not playing anything else. Anyway, I went to check the price on Steam to find out if I had to get a pirated version as a sampler first, and to my surprise there was a free demo. The demo only offered two missions, but after spending an hour messing around with the various units in one mission I decided it was certainly worth the $20. Moral here is, game demos make sales, at least if the game is any good. But it seems to me like the industry simply expects you to rent the game if you want a sample, or else pay the full price, which is likely one of the driving forces of game piracy. Obviously the whole "free of charge" thing is a major draw for pirates, but I can imagine I'm not the only person who buys games, but won't waste $20-$50 until I'm certain it's something I will get several hours out of.

The reason they are doing this... (1)

Anonymous Coward | more than 3 years ago | (#37439898)

Licensing. Simply put they can't afford the licensing for both the rights to streaming and rental in the same company. The rental will have access to more publishers. That's pretty much why they had to split it into two companies.

Re:The reason they are doing this... (1)

MobileTatsu-NJG (946591) | more than 3 years ago | (#37440238)

I have to admit, Im surprised the customers are being as fussy as they are about it. The rates are the same and they're adding game rentals. Now they're seperating the businesses which, I hope, will reduce conflicts of interest while they're negotiating their licensing deals.

I'm sorry, I am just not ready to wave my pitchfork around.

Cover my bar tab and you'll get a better name (0)

Anonymous Coward | more than 3 years ago | (#37439900)

After the millions spent on the brand and trademark searching, not to mention the looming millions on re-branding, and that's the best hey can come up with?

Seriously, cover my bar tab for a nights and I'll give you 5 choices that rock and make way more sense.

Should have called it 'Dumpster'... (0, Funny)

Anonymous Coward | more than 3 years ago | (#37439930)

because that's where they're headed.

Saucer separation (1)

khendron (225184) | more than 3 years ago | (#37439936)

This is like the Enterprise doing a saucer separation.

Netflix is separating themselves from the part of the business that they think are doomed. That way, when the DVD by mail business does go belly up, Netflix itself won't be around to take damage.

And I think they fully expect it to go belly up. Qwikster? Come on! "*ster" names went out of style almost 10 years ago!

Re:Saucer separation (0)

Anonymous Coward | more than 3 years ago | (#37440030)

I send you a hearty 'Harrumph' of agreement. They should have just called it 'Dumpster' - 'D' for DVD, 'umpst' for the gaggin noise you make when the garbage smells bad, and 'er' for what are we talking about again?

Re:Saucer separation (1)

EmagGeek (574360) | more than 3 years ago | (#37440270)

I would think it was the streaming business that was doomed to failure. ISPs are implementing bandwidth caps everywhere, so it is only a matter of time before it is no longer worthwhile.

I messed up. I owe you an explanation. (1)

johann21 (1701990) | more than 3 years ago | (#37439950)

Did anyone else think that email started out sounding like a nigerian money scam?

Good news, everyone! (2)

heptapod (243146) | more than 3 years ago | (#37439960)

NetFlix is also changing the name of their streaming service to The Pirate Bay increasing their streaming library 100fold!

Sounds like Trading Places. (2)

trout007 (975317) | more than 3 years ago | (#37439968)

I wonder if he made a one dollar bet with another CEO that he could ruin a successful company in one year and the other one could make a company successful in one year.

What do they put in the water in CEO land??? (1)

nedlohs (1335013) | more than 3 years ago | (#37439980)

So after pissing off a minority of users by changing the pricing struture the plan is to piss off the rest?

Force me to consider the disk and the streaming as unrelated things so that when I don't use one that much it'll be easier to ditch it?

I have to search for things in two places?

That whole recommendation thing they did a million dollar prize for not that long ago - it now can't use my DVD watching to recommend streaming?

Sure they are clearly planning to ditch the DVD half and re trying to limit damages from people ranting about it to a brand name that isn't netflix. But I doubt the people doing the complaining are going to oblige.

Drowning! (0)

Anonymous Coward | more than 3 years ago | (#37439998)

This whole scenario reminds me of what happens when someone falls in the water and realizes they are in over their head! They panic and begin to flail about instead of making calm decisions to get themselves out of trouble. If you're there with them, they'll try to hold on to you and end up dragging you down with them!

Are they planning on selling one of them off? (1)

elrous0 (869638) | more than 3 years ago | (#37440000)

That's the only possible reason I can think of for this bonehead move.

Sell it off or wind it down. (0)

Anonymous Coward | more than 3 years ago | (#37440034)

This sounds like they're starting to think about selling off or winding down the physical media side of the business.

It's going to be sold off... (1)

QuietLagoon (813062) | more than 3 years ago | (#37440062)

It looks to me as if Netflix will next be looking for a buyer for Quiflix. First the separate the HQ, then totally separate pricing with no discount if you use both services, now the separate name. It looks Quikflix is being separated away from Netflix because Netflix will soon be selling the Quikflix business off to another entity.

Turds are like worms (1)

Hognoxious (631665) | more than 3 years ago | (#37440080)

if you cut a turd in two, what do you get?

Two turds, that's what.

Definitely Not Thought All the Way Through (1)

sarbonn (1796548) | more than 3 years ago | (#37440090)

I received the same email this morning and immediately thought to myself that this was someone playing damage control, not someone with a plan and vision. I'm currently going through the process of finishing up a season of a television show I wanted to watch. And then I'll cancel both services. This whole Quikster thing rings of desperation, not a solid plan, almost as if they queried the fry guy at McDonalds and asked him what he would choose if he had to come up with something and then went with the first thing they heard. I don't think they realize that their customers are slowly pushing away from them, and that the damage has yet to be felt (it's going to occur during the next few months as the impact of the increase arrives and then the realization that Netflix is no longer the company it once was, as they pay two bills to get the same thing they used to get under one, even if it is the same price).

From a streaming only subscriber (1)

Anonymous Coward | more than 3 years ago | (#37440132)

Its interesting how mad everyone is getting. I dropped DVDs when the pricing changed because they weren't that big a deal to me so the existence of Qwickster doesn't affect me. I've put all my eggs in the streaming basket so I really hope they make good on their promise to get more streaming content available because of this course of action. If not and they crash and burn I'll have to go to Green Scene or Amazon Prime or something...

Uh oh (1)

boxxa (925862) | more than 3 years ago | (#37440170)

From a financial standpoint, this sounds like the Netflix business of streaming is trying to prevent the DVD business side from bankrupting it.

Streaming doomed to fail (0)

Anonymous Coward | more than 3 years ago | (#37440172)

Does anyone else besides me thing that "Qwikster" sounds more like a streaming company name (I can get my movie QWIK instead of having to wait for the mail)? Besides, streaming is doomed to fail as long as ISPs are allowed to maintain bandwidth caps.

Only smart if they announce new titles streaming (1)

swb (14022) | more than 3 years ago | (#37440186)

This ONLY makes any sense if they announce at the same time that they have made new agreements with all the studios to put all their catalog available for streaming.

That didn't happen, so now they are divorcing the service that actually *has* all the titles you want to watch from their primary brand and associating that brand with all the crappy titles you don't want to watch on streaming.

Corporate suicide -- how do they get all those apparently smart people to go along with this at once?

Well that's great (1)

rsilvergun (571051) | more than 3 years ago | (#37440210)

there goes Netflix. What made them useful to me was the low price compared to cable television. Take that away (by charging me $20/mo for two or three different services) and I'm out.

I guess people will pay just about anything for TV. Life sucks pretty bad unless your rich, so I can't blame them.

Embracing the disruption (4, Interesting)

CyberLeader (106732) | more than 3 years ago | (#37440224)

So we here in the Slashdot crowd are the first ones to laugh at businesses that fail to stay ahead of the technology curve. AOL and their endless CDs, RIM getting destroyed by iPhones and Android phones, Yahoo's failure to recognize that Google's advantage comes from more than just its search algorithms, et al. A common theme through all of these dramatic implosions is that the old business model strangled the new, and that the leadership of these companies was unwilling to take the short-term pain hit to prepare for the future. Yet Netflix is doing just that, and they meet with even more derision because it's going to screw up the existing customer base.

Do any of us believe that DVDs via USPS are the future of content delivery? Of course not. Could Netflix have spun it a little better? Sure, but there's a whole set of reasons that moving away from your established business model is considered painful, and one of those is that it's going to piss off the established base and cost you some lost business. A little more artistry in the transition would have been nice, but anyone who thinks that this move is going to kill off Netflix is probably mistaken. They are being remarkably honest about it all.

The DVD business is dying fast, and they know it. Direct content delivery is the growth industry that is disrupting DVDs (and eventually CDs, games, and packaged software) out of existence, and they're jumping to the new ship before the old one is sunk.

Streaming in Blu-ray quality? (1)

jgeiger (1356045) | more than 3 years ago | (#37440260)

Until they stream in 1080p with full audio the online portion of the service is useless for me. I have a home theater with the big TV and big audio system so I can enjoy the whole movie. If I'm on a plane then streaming might make sense otherwise I want the physical disc quality.
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