Netflix, the DVD by mail service that killed the corner video rental store, is now Qwikster. The announcement comes as the company attempts to save its profitable streaming business from a consumer revolt.
In an email to customers apologizing for poorly explaining an earlier price increase of the DVD service, Netflix CEO Reed Hastings said Qwikster will be separate from the main company, requiring DVD-by-mail subscribers to edit their queues of movies at Qwickster.com. Additionally, customers would receive two different credit card charges, although both would total the same Netflix price announced.
In light of shedding one million subscribers, dropping to 24 million from 25 million, Hasting’s email apologized for its earlier pricing announcement, writing “many members felt it lacked respect and humility. That was certainly not our intent, and I offer my sincere apology.” However, he did say the new pricing was needed, describing the DVD-by-mail and streaming “two different businesses, with very different cost structure.”
In a bid to sweeten the otherwise sour news of a price hike, Qwikster will also begin renting video games for the Wii, PlayStation 3 and Xbox 360 consoles. The move is also seen as keeping up with rental rivals Gamefly and Redbox, both of which offer games.
For some time, Apple has mulled ideas on how to create a Netflix-like service, streaming videos, movies and music via iTunes. Spinning-off the DVD side of Netflix appears to reinforce the belief that streaming data to users is the future for media delivery.
Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.
31 responses to “Netflix Spins Off DVD By Mail Service as Qwikster, Adding Game Rentals”
I love Netflix and will continue to use it for streaming. We rarely used the DVD option anyway and opt for Redbox (my kids think it’s cool).
If Apple comes out with something for a comparable price then I’ll likely switch.
And kill their iTunes Store business? I doubt it.
Case in point: LOST on iTunes is $300, but you can watch all of it for $7.99/month from Netflix. Even if it takes you 6 months to watch it all, you’ve saved $250 + you get a chance to watch other content as well. This is the reason why, as much bitching and moaning people have for the price hike, it is still BY FAR the best deal out there for consuming large quantities of content.
And Netflix doesn’t have a larger selection of “newer” stuff because studios don’t want them to. They want to buy the DVD/Blu-ray at $30 a pop, remember?
Remember Apple likes the volume business model.
How many Lost rentals/purchases has Apple sold through iTunes? Bet the profit would be larger if they had a 99/year or even 199/year all you can eat Netflix/spotify style media streaming service.
This does nothing to address the content issue, the 800 lb gorilla no one wants to talk about. The gorilla recently grunted when Starz announced the withdrawal of its film library (Sony and Disney) from the Netflix queue. It is a fundamental conflict of interest for Netflix to inexpensively stream content over wires that cable companies could be using to deliver the same content expensively. Netflix is doomed, except as a purveyor of box office flops, B and C movies, old and very old movies, old broadcast TV, and so forth.
Pull up a list of the 2010 Academy Award winners and nominees, and then go to Netflix Streaming. Almost NONE of these are currently offered via streaming.
Agree with Guest below…content needs a major overhaul. Until then, streaming video will be great in concept, but a technology ahead of its time.
Most of us will still need our DVD players. Shades of the transition from VCRs to DVD players.
Dead company walking
Think the content is poor now. Wait until February when they lose Starz:
http://latimesblogs.latimes.co…
Don’t blame Netflix. It’s the studios. They have the power on this.
95% if not more of Starz library was studio content that Netflix can contract directly and likely are.
With the talk of pulling back postal service to only 3-4 times a week, I am considering red box myself. Or hoping Qwikster does the same thing. Even if was only for the biggies.
But the studios don’t. They see iTunes as diskless DVD sales, so they demand that type of pricing etc. Granted they don’t give us the special features like the commentary tracks, subtitles, behind the scenes etc. And they probably could drop the price 50 cents to a dollar and still make out. Plus the nets don’t credit those downloads as viewers and put that money into the make good to off set the outdated ratings system
If they did all that, plus HD’d all the shows (even at their low-grade variant of HD), stopped making us wait until the physical DVDs came out, think the nets would see better numbers and more profit for many shows. And piracy might slow down at bit.
This was a move to be ready to sell off the old part of the business. Now that Qwikster is a separate company, it’s much easier to sell off as a business unit. Probably to red box. This lets them focus on the streaming, get more things up for streaming, and will probably be the way forward for this company…
Or the whole process happens in reverse and apple buys the streaming part of netflix…
Red Box is pretty bad ass. Check it out if you haven’t already.
RIP Netflix… It’s only a matter of time before you’re eaten alive by the new kid in town… Whoever that is going to be… Will it be Apple? Google? DISH Network/Blockbuster which just announced a streaming service today… Who knows.. All I know is I would have been perfectly happy continuing to pay you $10 bucks a month to get 1 DVD by mail and streaming… ,But now you only get $8 bucks from me, and once the Starz thing goes away I might have to cancel altogether.
Qwikster sounds stupid. There was no need to have separate names. The email that we all got still does not in my opinion justify the price increases.
So people buy devices and Netflix is installed. They go to the website to sign up and realize for a little more money they can get dvd’s too. Now they will never see that option without finding the entirely other website “Qwikster”?