TECH
01/25/2012 08:29 pm ET Updated Mar 26, 2012

Netflix Kills Plan For Video Game Rentals

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Netflix CEO Reed Hastings delivered some news on Wednesday that's sure to disappoint gamers.

During the company's quarterly earnings call, Hastings said that the company has axed plans to offer video game rentals as part of its DVD-by-mail subscription, according to a tweet by AllThingsD's Peter Kafka.

The possibility of a video game offering was proposed last September, along with the bombshell announcement that the company would spin off its DVD business into a separate business focusing solely on by-mail rentals. The new site, which would have been called Qwikster, would also have offered a premium subscription plan with an option for Wii, PS3 and Xbox 360 game rentals. The proposal was immediately and severely panned, and Netlfix put Qwikster to bed in October.

Despite the quick death of Qwikster, Netflix continued mulling the idea of renting popular video game titles, according to an email correspondence between SplatF's Dan Frommer and a Netflix rep. Now, however, that idea is officially dead, too.

It's a move that makes sense for Netflix, which has been slowly moving away from DVD rentals. In Hastings' September blog post detailing the botched Qwikster plan, the CEO wrote, "[W]e 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."

Indeed, the company's Q4 2011 earnings report saw a loss of 2.8 million DVD subscribers, for a remaining total of 11.2 million. Meanwhile, streaming subscribers grew for the quarter. According to the Associated Press, Q4 closed with "21.7 million streaming subscribers in the U.S. and another 1.9 million in Canada and Latin America." Over the next quarter, Netflix expects streaming to increase and DVD rentals to continue falling.

It seems that the company is finally starting to recover from the fallout over the Qwikster debacle, which was preceded by a massively unpopular price hike. And the turnaround can't come any sooner. The New York Post reported on Wednesday that Amazon is considering expanding its streaming service and even splitting it off into a more robust subscription business to compete with Netflix. According to AllThingsD, Hastings mentioned on Wednesday that his company is anticipating such a development. "We expect Amazon to continue to offer their video service as a free extra with Prime domestically but also to brand their video subscription offering as a standalone service at a price less than ours," Hastings said.

Verizon is also rumored to be mulling a Netflix rival of its own.

The aborted Qwikster plot ranks among one of the worst flops in tech during 2011. Check out the slideshow (below) to see the rest of last year's biggest tech missteps.

PHOTO GALLERY
Tech Fails 2011

Netflix CEO Reed Hastings delivered some news on Wednesday that's sure to disappoint gamers.

During the company's quarterly earnings call, Hastings said that the company has axed plans to offer video game rentals as part of its DVD-by-mail subscription, according to a tweet by AllThingsD's Peter Kafka.

The possibility of a video game offering was proposed last September, along with the bombshell announcement that the company would spin off its DVD business into a separate business focusing solely on by-mail rentals. The new site, which would have been called Qwikster, would also have offered a premium subscription plan with an option for Wii, PS3 and Xbox 360 game rentals. The proposal was immediately and severely panned, and Netlfix put Qwikster to bed in October.

Despite the quick death of Qwikster, Netflix continued mulling the idea of renting popular video game titles, according to an email correspondence between SplatF's Dan Frommer and a Netflix rep. Now, however, that idea is officially dead, too.

It's a move that makes sense for Netflix, which has been slowly moving away from DVD rentals. In Hastings' September blog post detailing the botched Qwikster plan, the CEO wrote, "[W]e 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."

Indeed, the company's Q4 2011 earnings report saw a loss of 2.8 million DVD subscribers, for a remaining total of 11.2 million. Meanwhile, streaming subscribers grew for the quarter. According to the Associated Press, Q4 closed with "21.7 million streaming subscribers in the U.S. and another 1.9 million in Canada and Latin America." Over the next quarter, Netflix expects streaming to increase and DVD rentals to continue falling.

It seems that the company is finally starting to recover from the fallout over the Qwikster debacle, which was preceded by a massively unpopular price hike. And the turnaround can't come any sooner. The New York Post reported on Wednesday that Amazon is considering expanding its streaming service and even splitting it off into a more robust subscription business to compete with Netflix. According to AllThingsD, Hastings mentioned on Wednesday that his company is anticipating such a development. "We expect Amazon to continue to offer their video service as a free extra with Prime domestically but also to brand their video subscription offering as a standalone service at a price less than ours," Hastings said.

Verizon is also rumored to be mulling a Netflix rival of its own.

The aborted Qwikster plot ranks among one of the worst flops in tech during 2011. Check out the slideshow (below) to see the rest of last year's biggest tech missteps.

PHOTO GALLERY
Tech Fails 2011
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