Netflix separates DVD-by-mail service into "Qwikster"

Netflix has just announced via their company blog (in the midst of a lengthy apology) that they will be renaming and splitting their DVD-by-mail service into a new entity called “Qwikster.” Netflix CEO Reed Hastings says that the move was prompted due to the two services (streaming and DVD-by-mail) slowly becoming two different businesses with different models and cost structures, and that the move is “necessary and best.” The name Qwikster refers to quick delivery; the Netflix name will be kept for streaming.

One benefit of the split is that the dedicated Qwikster team will also be able to deliver video games for the Wii, Xbox 360 and PS3 to your doorstep as an upgrade in the same way the Blu-ray upgrade option functions. “Other improvements will follow.” However if you’re a current subscriber to both the DVD-by-mail and streaming services there will be some changes and obvious splits that will occur.

First is that queues for both services will be completely separate, along with ratings, reviews and even billing. DVD-by-mail users will use qwikster.com, streaming will use netflix.com and those that use both will have to use both despite the separation between them. Hastings says that the separate websites for both services is an “advantage” and is “simplicity for members”. The pricing to use either or both services will remain the same as they are currently.

Some members will likely feel that we shouldn’t split the businesses, and that we shouldn’t rename our DVD by mail service. Our view is with this split of the businesses, we will be better at streaming, and we will be better at DVD by mail. It is possible we are moving too fast – it is hard to say. But going forward, Qwikster will continue to run the best DVD by mail service ever, throughout the United States. Netflix will offer the best streaming service for TV shows and movies, hopefully on a global basis.

Hastings also acknowledges all the members who remain loyal to Netflix despite all the shifting around, and wishes to communicate more about reasons behind change in the future as both the new Qwikster and Netflix teams “work hard to regain your trust.” Andy Rendich, who is the new CEO of Qwikster, has made a welcome video (below) to mark the occasion.

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The dutch said he said he's sorry for not communicating the change. No one don't give a crap about the failed (and unwarranted) communication. People care about the stupid price hike.

It is not that hard to manage two website subscriptions...give me a break.

I have only ever used the streaming service, and it is still nice, and I enjoy it.
I might actually consider the rental service now that they are adding video games.
I think it will be seamless, still. Going to two websites is NOT HARD.

If you are going to blame anyone, blame studios.

Like i said in one of my other posts about NFLX. The studios/Hollywood/Cable Co were waiting for the day they could sock it too Netflix. The first blow was adding caps to users/cord cutters, hoping they would flee away from HD content etc. Then Starz which sent everything spiraling downward from there. Netflix new this was going to be the case with news like this. So before hand, they decided to restructure their pricing to cap revenue losses due to all the bad news they had coming there way. They knew the backlash of the news to come would be horrible for them. So let's jack up the pricing and recoup our losses. They also knew the bandwidth caps were going to be killer and that the studios/Hollywood/Cable CO was after their throats. I can go on and on about the obvious. Truth is...Netflix will be sold within the next 18 months to one of the studios/Hollywood and then you can guarantee the pricing heads upwards to cable TV prices ALONG WITH YOU STILL BEING CAPPED and paying overage. STUDIOS/HOLLYWOOD/CABLE CO WIN...CONSUMERS LOOSE

With all that in mind, why not same it qwikflix? At last it'd be somewhat related and they'd be able to leverage the netflix brand.

NFLX is up %5 at the moment and I'm pretty surprised at that since the rest of the market is way down.
Maybe investors are banking on a brief upward spike that sometimes happens what a stock plummets badly.
I still foresee another rough week for their stock.

Astra.Xtreme said,
NFLX is up %5 at the moment and I'm pretty surprised at that since the rest of the market is way down.
Maybe investors are banking on a brief upward spike that sometimes happens what a stock plummets badly.
I still foresee another rough week for their stock.

That up was brief...they are already down 3$ and some change...as investors catch wind of this today, I'm sure the push to sale will be on...

abadaba said,

That up was brief...they are already down 3$ and some change...as investors catch wind of this today, I'm sure the push to sale will be on...

Haha yup. I spoke too soon. And the nose dive proceeds.

NETFLIX, take a hint from WalMart, one-stop shop. Why? Well, why not? People want easy, and many people live by the KISS principal.

I really don't see how this is such a calamity. I know plenty of people who use Netflix for one of each service but never both. They're trying to separate it so they can focus on getting the DVD business back to what it used to be. Like has been said before, the studios are going to do everything they can to shut down the online streaming end of things, and so I'd rather see one side of their business go down than both.

Not only is separating the services into two distinct entities going be a hassle for people who have both DVD and streaming accounts...but "Qwikster"? Really? What a stupid name...

Yeah this is just ignorant.... I've dropped the streaming already, I'd drop the Disks if I didn't have no other choice in my area since the last rental place just closed up that's within a 10mile radius and the costs I'll pay in gas to get back and forth doesn't justify it.. *sad*

I received the email this morning. What are they smoking in that company? Whatever it is keep it away from me because it destroys businesses.

This started off as an apologetic email and then basically it turned into an email telling me how the service is going to be more difficult to use now. Oh yea they're going to add games, but you have to pay separately for that as well. I've had the same movies for about 4 months and haven't streamed a movie in equally as long and that's why I haven't cancelled, but this company is pushing me to the edge right now.

Netflix will be extinct in the next 18 months...the studios won period and dumb decisions to increase revenue on those losses will drive customers away...good-bye Netflix, here's to your stock being hammered again today.

I got this pos's email and it still does not change things. Either lump the services back again or watch this company go down in flames. He just needs to admit they got greedy and that they are changing it back. I could care less about why they changed it.

Considering the outrageous new fees that the movie studios have reportedly been demanding from them for the right to continue streaming movies, I really don't think that it is Netflix that is being greedy here. It isn't like they can simply eat the cost of those new contracts, some of which are now costing them many times what they did just a few years ago. Hell, Starz turned down an offer of 10x what their previous contract was.

This is just the PR recovery method to give the stockholders that warm, fuzzy feeling of the the ship not actually 'sinking', but rather the waves are just getting bigger.

The hole in the side of your cruise liner sir was caused by the torpedo you paid to have shot off by the USS Greed Money submarine.

Your fraudulent attempt backfired so hard. Enjoy that sea water taste.

Oh come on... if anything that is overpriced, it's Apple Streaming for Movie and BUYING of movie, wow you can get a Overcompressed POS 720p file with overcompress 5.1 audio for 20$. Netflix was a good idea, but not in all the country. In Canada, their selection of streaming sucks ass, there's nothing really good on it. People prefer Instant Watch on their PVR, at least the quality is better then streaming and it doesn't kill you're internet bandwitdh. Personally i buy my stuff either used (at 13-14$) and rarely new unless it's a movie that i want. HD Netflix look ok on my 24inch PC monitor, but on my 1080p Projector (106 inch screen) it's puke'o'tronic..

It's all about the right$ they have to pay to the studios.

DVD rental has an established fee structure and since DVDs are dying, it makes sense to keep this a separate venture price-wise.

Streaming is only going to get more expensive since the studios want to kill companies like Netflix any way they can. They don't want you streaming movies. They want you to buy their overpriced bluray discs. They understand that business model, even though it's dying. They don't understand the internet or the future.

Yeah, just read the email also. I really don't understand what they are trying to do now. No integration between DVD and streaming is going to be the death knell.

mdubb559 said,
Yeah, just read the email also. I really don't understand what they are trying to do now. No integration between DVD and streaming is going to be the death knell.

Agreed. They're acting like there's no parity between the two businesses, but they're both MOVIE RENTAL SERVICES... The how really doesn't matter. This move makes absolutely no sense. Especially considering that this was what distinguished them from their competition...

I got this long winded eMail from NetFlix:


I messed up. I owe you an explanation.

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

For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming. Most companies that are great at something - like AOL dialup or Borders bookstores - do not become great at new things people want (streaming for us). So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn't have changed the price increase, but it would have been the right thing to do.

So here is what we are doing and why.

Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD. DVD is a great option for those who want the huge and comprehensive selection of movies.

I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We need to focus on rapid improvement as streaming technology and the market evolves, without maintaining compatibility with our DVD by mail service.

So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.

It's hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. 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. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

There are no pricing changes (we're done with that!). If you subscribe to both services you will have two entries on your credit card statement, one for Qwikster and one for Netflix. The total will be the same as your current charges. We will let you know in a few weeks when the Qwikster.com website is up and ready.

For me the Netflix red envelope has always been a source of joy. The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you.

I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly.

Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.

Respectfully yours,

-Reed Hastings, Co-Founder and CEO, Netflix

p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments.

------------------------------------------------------

It was so long that I did bother reading it. Just get to the point al ready. This Hastings guy clearly likes the sound of his own voice.

This just in, NFLX market cap decreases by another 19% on Monday.

NFLX customer satisfaction rates decrease by another 45% on Tuesday.

NFLX ceases operations, files for bankruptcy, within the next 12-18 months... and will blame the USPS' cutting of next-day first-class mail delivery, and not their unwarranted executive moves.

The addition of video games is awesome, however...

With the two separate websites, when renting a movie my mail, there's no way to tell if it's already available on Netflix Instant. That sucks for the customers, since they have to check both websites now. Keep it with one website!

andrewbares said,
The addition of video games is awesome, however...

With the two separate websites, when renting a movie my mail, there's no way to tell if it's already available on Netflix Instant. That sucks for the customers, since they have to check both websites now. Keep it with one website!

Seriously. There is nothing easier about having to maintain two different accounts and use two different web-sites.

Solid Knight said,

Seriously. There is nothing easier about having to maintain two different accounts and use two different web-sites.


+1. This was clearly not done for their customers... It sounds more like something spurred by internal drama...