Netflix's announcement on Sunday night that it would be separating its DVD mail-order business into its own company, Qwickster, has already generated a lot of criticism from Netflix customers. Company CEO Reed Hastings' blog post has generated a ton of comments, many of them negative. One of them comes from Jonathan Ortega who wrote, "Reed, thanks for reminding me that I should go somewhere else for my dvd (sic) rentals. it was an insult enough that you raised the price on me last month, right in the middle of the biggest recession since the Great Depression. but now instead of a sincere apology, all we get is excuses and a flimsy new name."
Another commentor, David Cowing, wrote, "This is a joke right? Qwikster? I kept both my Streaming and DVD services, against my better judgment, because of the convenience they offered as a combined service. DVD alone is not cost effective compared to Redbox and Streaming offered poor selection, but together even AFTER doubling the price, it still presented value. Now that I will have to manage two separate websites, with two separate catalogs and two separate cues, Netflix/Qwikster has lost all value to me."
Hastings said in his blog post that one of the reasons the company is separating its streaming video and its DVD mail order business is that the two division have different cost structures. He states, "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. The additional streaming content we have coming in the next few months is substantial, and we are always working to improve our service further."
Meanwhile, the fact that the new Qwikster will also be offering an option to rent Xbox 360, PS3 and Wii game disks is likely to be a big thorn in the side for GameFly, which has pretty much had a monopoly on mail order rental games for the past several years. GameFly has yet to comment about Qwikster's new business plan.
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