Qwikster: Netflix To Split DVD Service Into New Business

In a post on The Netflix Blog that went up Sunday night, the company's CEO, Reed Hastings, announced that Netflix would split its DVD-by-mail service and its streaming-video service into two companies. The new DVD-only company, called "Qwikster," will be completely separate from the streaming business. Hastings also expressed contrition for the way the company rolled out its recent price hike, which alienated many customers.

Hastings wrote: "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." He went on to announce that Qwikster -- the name is chosen "because it refers to quick delivery" -- is becoming its own entity because " "we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently."

The move comes on the heels of an overwhelmingly negative reaction to Netflix's price hike in July. This week, the company announced it had lost many more subscribers than expected, and its stock price fell accordingly.

Early reaction to the surprise move was mixed. Twitter users did not warm to the name "Qwikster," but Erick Schnonfeld at TechCrunch gave Hastings the thumbs up.

"You’ve got to give him credit for moving fast in the direction where he thinks the greatest opportunity lies.

"Who knows how investors will react in the morning?" Schonfeld wrote. "But it is the right move."

Below, see Hastings' apology video with new Qwikster CEO Andy Rendich, as well as a screenshot from Qwikster.com.

Comments

[screenname3453]

05:23 PM on 09/27/2011

Am I the only person who's now happier with netflix? I'm moving to netflix now because it finally seems like a better deal than blockbuster's online service, with the addition of games to the mail service. The rest of the announcement seems inconsequential.

[jp7867]

03:33 PM on 09/21/2011

Quickster/Shyster. Nice try.

[AnimlNitr8]

06:49 AM on 09/21/2011

kinda makes me glad that i cancelled years ago when they kept sending me scratched dvds that i couldn't even watch.

[x1cness]

04:58 AM on 09/21/2011

Goodbye Netflix, it was good while it lasted.

[emmeaki]

10:44 PM on 09/20/2011

So, people who pay for DVD and streaming will now have to set up queues on two different websites and receive two different credit card charges? Who thought this was a good idea?

[DeTex]

07:23 PM on 09/20/2011

Reed Hastings resets the bar for FAIL.

[Red Russet]

05:44 PM on 09/20/2011

Why bother setting up new companies, they only have about 26 streaming videos anyway, and most of them are for age 0-3 years olds.

[Joscasta]

05:04 PM on 09/20/2011

This is the most stupid announcement ever. When I saw the plans change, I switched to DVD only as the streaming content has yet to really catch up with the DVD content when it comes to adding subtitles/captions. So now I have to move my entire list.. which is quite long... to a website and expect different charge on my credit card. Wow.. once I finish watching the television show that I am currently awaiting disc 2 out of 5 for.. I will be canceling.

[furbytwins]

04:23 PM on 09/20/2011

NETFLICKS,Hastings,Andy Rendich, EXCUSE YOURSELF! SAYING SORRY DOESNTEXCUSE YOU FOR LIEING! YOU NEVER EVER SENT ANY ANOUNCEMENT OF CHANGING THE PRICE ON MY NETFLIX ACCOUNT!! I CALLED TO TELL YOU YOU HAVE A NERVE JUST GOING INTO MY ACCOUNT AND STEALING 6 MORE DOLLARS!! I TOLD YOU THIS IS GOING TO LOOSE YOU ALOT OF BUISNESS,, AND TO PULL THE WOOL OVER OUR EYES DURING A RESSESSION, AND MAYBE A DOUBLE DIP RESSESSION IS GOING TO HURT NETFLIX AS WELL IN A HUGE WAY!! I WANTED TO CANCEL,,I WANT TO SUE FOR YOU STEALING ORE OUT OF MY ACCT THEN YOU HAD THE RIGHT!!! LIES!! YOU NEVER NOTIFIED ME!! HOW MANY MORE NEVER GOT NOTIFIED BEFORE YOU TOOK UN VERIFIED MONEY FROM THEM?? PEOPLE SHOULD BE ABLE TO KEEP THERE ONE DVD A MONTH AND STREAMMING FOR THE SAME PRICE! THE OLD CUSTOMERS SHOULDNT HAVE TO CHANGE A PENNY AND KEEP THERE SERVICE AS IS!! MAKE THE NEW CUSTOMERS PAY.. YOU DONT KNOW WHAT THE HELL YOUR TALKING ABOUT,ITS PURE STUPIDITY AND GREED! NOTHING MORE,, AND IM QUITING YOU TOO! BUTTHEADS,,,,,WHATS THIS? YOU SAY SORRY FOR NO COMMUNICATION? YOU NEVER TOLD ANYONE BUDDY! STEALING IS A FEDERAL OFFENCE!

[DeTex]

07:24 PM on 09/20/2011

Ever tried decaf?

[Yelwrose]

06:09 PM on 09/21/2011

Look at your post. Look at the other posts. Can you see that yours is unreadable?

[anastasia222]

03:46 PM on 09/20/2011

Yea, I noticed. I'm not the one who can't get my account changed. Haaaahahahahaha.

[ambacengineering]

03:31 PM on 09/20/2011

They'll not have my respect until they finally deliver me a copy of Faster Pussycat, Kill, Kill.

[DeTex]

07:28 PM on 09/20/2011

I have my own DVD copy of Manos: The Hands of Fate, which translates to Hands: The Hands of Fate.

Manos makes Pussycat play like The Godfather.

[ambacengineering]

03:27 PM on 09/20/2011

This may be a "huge announcement" if you are a shareholder. For customers, it's a "who cares?" If my DVDs come marked Netflix or Qwickster, I couldn't care less. I don't stream then, so my costs haven't gone up. Yet.

[Shain Eighmey]

07:17 PM on 09/20/2011

The big thing is that now you will have to manage your DVD and Streaming ques separately instead of being able to do it all in one place. So, it's actually a decline in service for us Netflix subscribers.

[h111aryc1inton]

07:49 AM on 09/22/2011

It does seem silly to have it separated - except - weren't they two different queues anyway?

I just want to know why there isn't more content on the streaming - see no reason to stream yet - eventually I will switch but for now I'll stick with my plan...

(btw a 10 yr member)

[stringzz]

12:02 PM on 09/20/2011

I am all for the split if they can offer the same catalog for streaming as they can for physical DVD's. Then I wouldn't want the physical disc, unless I wanted a visually stunning movie on blu ray.

[Erewhon7]

11:54 AM on 09/20/2011

This obviously bolsters Republican argument that corporate VPs need to be paid more. umm.... how does the mantra go:"To compete for better talent in the marketplace of ideas."
Ha-ha-ha-ha-ha-ha-ha-ha-ha

[stringzz]

12:00 PM on 09/20/2011

"Republican argument that corporate VP's need to be paid more"? Where do you get these outlandish ideas? Who is spoon feeding you the propaganda? I have never heard that argument on the Republican platform.

Where is the critical thinking?

[Erewhon7]

01:17 PM on 09/20/2011

1.I didn't state this ideological concept is included in Republican party platform-- Strawman fallacy.
You demonstrably don't possesses enough cognitive skills to differentiate between two concepts of ideology and party platform.

2.Overpaying corporate board members and underpaying the employees is one of the most cherish talking points of Republican ideology. This beyond indisputable.

[lilred3400]

09:41 AM on 09/20/2011

I am a long time netflix subscriber, when netflix announced its pricing changes I down graded my service. Now with the latest attempt at "bait and switch", I may cancel it all together. There is plenty of free streaming content and lots of competition. I wonder what the next big change of service will be, what Netflix doesn't understand is subscribers consider DVD's and streaming video content one service from one subscriber, DON'T split it up so we can be billed twice for what should be one service.

[stringzz]

12:06 PM on 09/20/2011

I wouldn't call it a bait and switch, different context.

You don't have to subscribe to both, and yes you can find streaming content elsewhere. However, the obviously could not offer the content they wanted to via streaming because of the greedy Hollywood types who charge extra licensing fees for streaming. They are the ones who forced this split, or, Netflix would have had to up their rates, simple as that.