Netflix split into DVD(Qwikster) & Streaming (Netflix) & Survey

[digitalbabe]

Per CNN:

Netflix is rebranding its 12-year-old movies-by-mail service as Qwikster and adding video games to its catalog, Reed Hastings, the company's CEO, announced Sunday night. The Web-streaming portion will continue to be called Netflix, he wrote on the company's blog.

After the separation, people who subscribe to both services will have to log into two separate websites, Netflix.com and Qwikster.com, to manage their movie queues and account information, Hastings wrote. Customer reviews and ratings from Netflix will be ported to Qwikster for the launch, but after that, people will have to rate and search for movies on each site separately, he wrote.

Qwikster's site currently presents a landing page that says it is "launching soon." Hastings did not offer a timeline for Qwikster's debut. Andy Rendich, the operations chief and 12-year veteran of the company, will run the new mail-order arm.

In addition to DVDs and Blu-ray discs, the new service will offer console games for Microsoft's Xbox 360, Nintendo's Wii and Sony's PlayStation 3 for an extra monthly fee. The change will put pressure on GameFly, a competing service dedicated to subscription game mailings.

"Members have been asking for video games for many years, and now that DVD by mail has its own team, we are finally getting it done," Hastings wrote. Responding to a question in the blog post's comments, he wrote, "Old Fogey discs will last a long time."

Another person questioned whether Netflix was setting the DVD business up to be sold off later and asked how long until that would happen. "A long time," Hastings replied. "We know the business better than anyone else."
Dish Network, which recently acquired Blockbuster in a bankruptcy auction for $320 million, is believed to be unveiling a revamped movie-streaming service on Friday. Netflix also faces competition from Hulu, YouTube and an array of new entrants.

Netflix customers were incensed in July when the company announced that it would stop bundling the streaming service for free with DVD-by-mail plans, effectively increasing the price for some by as much as 60%. Hastings finally offered an apology, not for the price hike but for failing to clearly communicate why the change was being made.

"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," Hastings wrote. "I messed up. I owe everyone an explanation."

Hastings has worried for the last five years that Netflix will fail to successfully adapt its business to growing opportunities, such as online video streaming, he wrote in a rare public admission for the savvy Netflix co-founder. He said he hoped to avoid similar fates to Borders Group, the bookstore chain that filed for bankruptcy this year, or AOL, the dial-up Internet king that is struggling to transform itself into an online media company after a nasty corporate breakup from Time Warner, which is the parent company of CNN.
"In hindsight, I slid into arrogance based upon past success," Hastings wrote. "Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight."

In a video explanation, he clarified the company's reasoning for the changes, saying, "DVD and streaming were becoming more and more different, and we could do a better job for both services if we separated them."
While Netflix is not going back on the price changes from earlier this summer, customers should not expect further increases, Hastings wrote. In his response to a comment on the blog, he said the adjustment was designed to help Netflix improve the quality of movies and TV shows available on the streaming service, which many say is lacking.

 

[Horhay]

I am not renting DVDs or have any mail disc service anymore, I just use streaming now. I think people were more used to just going to one site. Who knows how this will turn out.

 

[digitalbabe]

Outcry, as usual....at least per initial response.

 

[apsmith21]

Kind of torn on this one. I went with streaming, just because I watch a lot of TV shows and things like that.

But given Netflix will lose the Sony and Disney titles in Feb 2012, I'm on the fence. A lot of movies I've been watching lately are independent flicks and I'm intrigued about the possibility of video game rentals.

Hum. :movie:

 

[jefXfree]

This seems like a TEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEERRIBLE idea...

Two bills for one service? People barely stuck around for the price gouge... Now they're going to make those that accepted the price hike for both services pay a bill to two separate companies?

And I'd never use them for games. If their ****** streaming is any indication about what they're going to offer with their games then no thanks!

 

[Horhay]

They are having a hard time now.

Over the past few months, the seemingly untouchable Netflix has been dragged down by a couple of big fat blunders. First, the pricing model change lost the company a projected one million customers and sent stock prices dropping; then, in an effort to (somehow?) smooth over the situation, Netflix hastily introduced Qwikster and instead managed to only further irritate consumers and shareholders alike. It’s clear that Netflix needs to do something to turn their fortunes around at this point, or risk becoming the next AOL or MySpace.

But what, exactly? Netflix CFO David Wells recently offered some insight into the various possibilities the company is currently exploring in reaction to the backlash. More details after the jump.

During the Goldman Sachs Communacopia conference this week, Wells stated that while he hadn’t completely dismissed the idea of price cuts, he did not believe such a move would fix the company’s problems. “At this point, we’re going to step back and look at a number of things,” he said. “But lowering prices, or offering a discount for three or six months, is a little bit of kicking the can down the road. It’s certainly in the realm of possibility, but I don’t think its going to win back the customers that we lost.”

Another potential move would be to introduce an a la carte plan to complement the current subscription model. However, according to Wells, a la carte VOD isn’t high on the list of Netflix priorities. “What we said traditionally about VOD was it was a low-margin business that complicates (our) simplicity,” he explained. Nevertheless, “n today’s evolving and changing world, we’ll look at a number of different options.”

Wells also said that Netflix is reconsidering one aspect of the Qwikster/Netflix split that had consumers especially peeved: the decision to totally separate queues for the two services. Members planning to subscribe to both services complained that managing two queues would be an added hassle, as they would have to rebuild their lists and re-enter their movie ratings for the recommendation system.

Although Netflix’s current woes stemmed largely from a failure to predict consumer reactions, Wells stressed that he didn’t want to go too far in the opposite direction and take too much stock in angry comments on blogs and on social media. Wells (rightly) pointed out that upset customers could just be more inclined to speak up, meaning that their views may not necessarily be representative of most customers’.

At this point, I’m not sure what Netflix could do to restore its public image. A price cut, while tempting, actually doesn’t seem like the wisest course if it means Netflix will only have to raise fees again in another several months. The a la carte component sounds intriguing, but Wells doesn’t sound terribly interested in developing it. Integrating the Netflix and Qwikster queues seems like an obvious win, but probably won’t go that far in smoothing things over. It’s also conceivable, of course, that Netflix won’t end up doing anything at all — that it’ll weigh their options and decide that staying the course is the way to go. So…

 

[digitalbabe]

Poll added for quick 'chime in' options. Multiple answers enabled. Enjoy! DB