The co-founder and CEO of Netflix, Reed Hastings, and head of DVD operations, Andy Rendich, caused quite the riot this past summer. That pair’s joint decision to split the Netflix unlimited streaming and DVD mail plans, thus significantly raising costs for consumers who utilize both services, did not go over well.
Netflix stocks have dropped significantly since then; just this past week, the company also cut down its subscriber forecast for the current quarter to 24 million – about a million less than originally predicted, at the beginning of this month.
Hastings has released a statement that not only serves as an apology for the manner in which Netflix handled the changes, but also reveals that the DVD mailing service is now being restructured as its own brand – complete with a new name and additional item options.
On the topic of the logic behind the Netflix service division, Hastings offered the following:
Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD, plus lots of TV series. We want to advertise the breadth of our incredible DVD offering so that as many people as possible know it still exists, and it is a great option for those who want the huge and comprehensive selection on DVD. DVD by mail may not last forever, but we want it to last as long as possible.
I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We feel we need to focus on rapid improvement as streaming technology and the market evolve, without having to maintain compatibility with our DVD by mail service.
So 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 Netflix DVD mailing service is now a separate brand.
The Netflix Mailing section – now renamed Qwikster – will feature Rendich as its CEO and offer both DVDs and video games as part of its services. Here is Hastings’ description of the new brand:
Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. 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. Other improvements will follow.
Another advantage of separate websites is simplicity for our members. Each website will be focused on just one thing (DVDs or streaming) and will be even easier to use. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated. So if you subscribe to both services, and if you need to change your credit card or email address, you would need to do it in two places. Similarly, if you rate or review a movie on Qwikster, it doesn’t show up on Netflix, and vice-versa.
There are no pricing changes (we’re done with that!). Members who subscribe to both services will have two entries on their credit card statements, one for Qwikster and one for Netflix. The total will be the same as the current charges.
-
So, does the new Netflix setup sound better now? Or has the company shot itself in the foot, once again? Be sure to let your feelings be known in the comments section below.
Source: Reed Hastings
![Fall TV 2013: 10 Best New Shows [Trailers]](http://static.srcdn.com/slir/w87-h65-c1.33:1/http://screenrant.com/wp-content/uploads/abc-fall-previews-shield.jpg)
‘Dexter’ Season 8 Trailer: The Hunt Begins – How Will it End? 
‘Game of Thrones’ to End in Season 7? 
‘Pacific Rim’ Featurette Explores ‘Drift Space’; First TV Spot Offers More Action 
‘Halo’ Live-Action TV Series From Steven Spielberg Announced 
I do not like it. Now you have to go to two websites to do what you use to be able to do on one? They are also splitting your bill up which in all honesty isn’t a big thing but just a peeve. I do like that they will be doing gaming now but how much more are they going to charge you for that? They are still just offering the same standards they have now but seem to be making it difficult to do one stop shopping anymore.
I’m going with shot foot. The people that cancelled due to the price increase aren’t going to come back because it’s been renamed. As a matter of fact, if I hadn’t opted out of the streaming, I would have cancelled due to the inconvenience of two websites and two billings.
I quit the streaming after the price hike, so this doesn’t affect me in terms of the two websites. However, I still think it’s pretty stupid. It seems like they’ll eventually spin it off completely and act like it doesn’t exist. It won’t change my viewing habits, but seems like an awful PR move.
I like the video game aspect but now with two services will they improve the selection of the streaming service. Things like more movies, and also not cycling selections in and out. I went to watch the first X Files movie I had queued and found it wasnt there. I really hate how they take movies on and off like that. Maybe they’ll pull their head out of their asses and make it consistent so I don’t have to go across town to rent a movie. Thus making it pointless to have Netflix!!
I am going to start looking elsewhere. I did try amazon instant streaming and I liked it.
There is no ‘logic’ behind the split. DVDs do not affect streaming and vice versa.
I could see if they had thousands of DVD players and had to physically put a DVD in a drive for me to stream it….
However they do not. There is no reason (that I can logically see) to ‘split’ them.
Except maybe money?
As for people complaining about the price hike. Take what you can do with the service…. Stream (multiples) on streamable devices. Meaning I can stream one show/movie in one room and my son can stream another in another room. Not to mention my wife watching a DVD. Then we can (together as a family) watch something.
For $20 a month.
I giggle at the people that complain about the price.
They only split them to emphasize the fact that they are now two businesses and have to be managed differently (thus justifying the price hike?). This is nuts if you think about what constitutes a healthy business model (diversifying your product line). Basically, this is just Hastings showing the world what a lousy business man he is.
What a phony apology, a real waste of my time. This guy needs to be fired.
Have to say I’m not a fan of this. I understand costs of business and the change to the model announced previously (although it WAS terribly mishandled). But as someone mentioned, now I have to check TWO sites? What a pain.
And for the record, I’ve always been a huge Netflix supporter – member since 1999.
Vic
I agree, Vic.
I switched to the Blockbuster mail subscription after the Netflix price increase- but after a month of using Blockbuster, I’m missing Netflix. Blockbuster randomly picks DVDs from my queue… Sends TV season discs out of order and takes longer to mail than Netflix… I do like the ability to trade un movies though.
I’m considering going back… I’m glsd to see the NF prices have returned to normal.
Don’t know what you are talking about. They haven’t changed the pricing. It’s still $6 more than it was for both steaming and DVD service just a few months ago.
I stick with streaming.
Congratulations on shooting your other foot!! I was thinking about canceling the DVD service, but now I’m sure I will. We joined for DVD and streaming – together on one website for one price. Very easy and efficient. Love your long winded email about what you want, but what about what WE want. The only thing splitting the services accomplishes is making it easier for your competition to steal your customers.
Amazon is doing free streaming video and I can rent DVDs at Red Box.
Since when is amazon streaming free?
I think Netflix wants to dump the DVD segment of its business entirely. This spinoff is just the first step. I’d be curious to know if there’ve been any friendly talks between, oh, say, Gamefly and, oh, say, Blockbuster (or evern GreenCine) that would indicate the possible imminent existence of a company that would like to acquire a DVD/game service with a substantial customer base and a superior database management system.
I’m sorry, but they have officially gone too far this time. I am done! People have been trying to talk me out of Netflix for a long time, but I kept defending them. But I just closed my account after reading this. I use both streaming and dvd services, and now they made it two separate payments? Forget that! I’ll find some other site. Goodbye, Netflix!
I really don’t see a problem as I only use streaming. I find it less of a hassle and more convenient. DVD quality sucks and I really don’t feel like paying more for the bluray upgrade.
This is something I knew was coming. I said it during the price change and I’ll say it again. Streaming is the future and soon netflix will be stream only….guess I was right. That was the point in all this. In pushing customers to support dvd or streaming during the price change, I’m betting the numbers who chose streaming outweigh dvd customers.
I will continue supporting netflix and their streaming because it’s a service that will only get better.
I for one chose Blu-ray over streaming. I do not think streaming is ready for prime time yet. I have FiOS and the glitching despite fast download speeds is incredible. Plus if I want to see artifacts in video, I’ll watch stuff for free on YouTube & elsewhere on the web with similar quality and no cost to me.
I bought Blu-ray for high quality video and 5.1 surround sound at 192KHz, not for compressed and streamed crap.
Quite honestly ‘I have FiOS’ is probably your biggest issue. I still think that has a bit to go in reaching the potential that cable has.
Just my opinion though and I know some areas dont have choices.
I hate to burst your bubble, Ori, but streaming for the vast majority of their catalog is waaaay lower quality than DVD. Most of their stuff is not HD. At least with DVD’s, I can use my upscaling DVD or BlueRay players and get far better quality than streaming. And with streaming, I always got intermittent breaks while it was buffering. Not to mention the slim catalog offered in streaming. Sure, the future is streaming content, but we aren’t really in the future yet. Let’s say I want to watch season 5 of Dexter on streaming. Oh, wait, they don’t offer it on streaming. Sorry. SOL.
I just cancelled the DVD service (now Qwickster?) and will most likely cancel the streaming video portion of the company as soon as we finish with a series we’re now watching. Who needs this kind of “service” and disrespect? I’ll be looking elsewhere/
I’ve been a member and supporter for years. Almost 10 years, I believe and I think this is a huge mistake.
Here’s how I see it. They’re splitting the company up to purposely make it inconvenient for us and in turn, to eventually get us to take the streaming route. We all know that’s where the future is. They know it, we know it. Physical media will gone in the next few years for mainstream entertainment. By pushing us into these ridiculous terms by two companies, two payments sytems, separate queues, etc, we’ll “realize” that hey, we need to go with the streaming route and give up on DVDs altogether. The USPS is on the verge of death which is yet another mark against DVDs. And by just giving the DVD company a stupid name, we’re subconciously driving away from physical media.
And I don’t have a problem with that. I prefer the physical media (aside from my Bluray collection). But the issue with pushing the streaming is their true downfall. Their content offered to streaming members just outright sucks. I want to have today’s films and TV shows available to me streaming. I lived through the 80′s and before and yeah, occasionally, I want to go back and catch something from then, but their streaming library is severly lacking.
This model is what made them who they are today and probably was the reason Blockbuster went out of business. Netflix should be learning from this. I have a Family Video up the road from the house which is who’ll be getting my business from here on out once I cancel my subscription with Netflix.
Correction: I prefer streaming media.
However as stated Streaming does not have everything. So how could you make the statement of they are pushing away from it?
The people that make the movies own the DVD/Blu Ray rights so the more of those they get out (bought rented) the more money they make.
Streaming takes it out of their hands and gives the streamer certain rights more in their favor then the studios.
I want to blame the studios.
Also how difficult is it to check 2 sites? I mean you could have 2 windows open on most current PCs doing two different things at the same time. You could probably even open another window and stream while you were browsing both Qwikster and Netflix….
After over 10 years of loyal support you are leaving over having to check two site instead of one…..
But it’s about convenience. I know I can open two windows open, but as of right now and prior, when i did a search on a title, it would reply with results saying “streaming” or “dvd”. Once a title on “dvd” came to streaming, it would notify me with an icon saying it was available for streaming and even add to your streaming queue. now with two databases, my search results may result in nothing. Does that mean they don’t carry the film or it’s just available in streaming / dvd only. Everyone could open two windows, but we’ve been using a wonderfully built search engine until now and now, it’s being taken away. Now they bill us separately. Now we have to go to two sites. That’s not condusive to “good” customer service.
And i agree with you. It’s the fault of the studios. They’re the greedy ones. i know that a lot of Netflix’s problems are because of the studios.
As for the argument for pushing away from physical media, it’s all about making money. What Netflix could save on by getting rid of DVDs, they’d save money on shipping, which they pay for, distribution centers, employees, etc where all they’d have to do is fill a warehouse full of servers. Drive space is cheap these days and the link from those servers to our homes is primarily the customer’s responsibility (to a degree, but moreso for us than them). Because of that $$$… for Netflix, that is.
I’m not saying any of this is neat. it’s sloppy and poorly thought out. But it’s a business, and decisions need to be made that we won’t like to keep them afloat.
I actually think they will somehow keep them seperate but together.
Meaning they will cross reference one another however to actually order one or the other you will have to open a seperate window.
Something akin to say checking the Best Buy site and seeing if it is at your local store.
As for the physical aspect though you still have the studios that hold all those rights. So if they do not want you to stream you wont and if they say we wont allow you to release the DVD/BluRay for rental until 30 days after it has been for sale they will.
So there will always be a physical medium (IMO) at least for another 10 years or more. That is really the only way the studios can keep their grip on everything.
This takes me back to VCRs and how the rental places would want to charge you full price (sometimes $150) for the video tape they paid for. Instead of you going out and buying a copy for $30 and giving it to them.
Overall though I still think the pricing model and the use of two websites is a deal and a minor inconvience for the service and product I recieve.
your precious closeest to newest movies they stream on netflix is because of starz …netflix and starz’s contract is over in spring and starz raised the price for next time and netflix cant afford them next time around…so you really think their going to be able to afford all new movies later, then youre dreaming…. they only have crap to pick to stream, wait until spring and enjoy your documentaries because if they can get starz with their current profit, do you really expect more fresh movies? and its only a matter of time before a price increase because of video games and an increase in streaming substantially, until youre paying $30 or more just so netflix can get rights to play new movies and to fix their crappy streaming picture quality
I’m really, really bothered by this. It’s not enough that I’m now paying more for the same service I was last month, but then I wake up this morning to this “apology” from Netflix, saying, “Sorry we handled that last change so badly. Here’s another big change to annoy you!”
I would be fine with them wanting to go all streaming and for them changing the name of their DVD service, but what really annoyed me was the fact that THE TWO DIFFERENT WEBSITES ARE NOT GOING TO BE INTEGRATED! As it stands now, when a movie in my DVD queue becomes available on instant viewing, a little “Play” icon will appear next to the title. I normally will then take this movie out of my DVD queue because it will auto-populate to my instant queue. This will no longer be the case. I will have to log-in to TWO different websites to check which movies are available on each one. I also wonder if Qwickster (awful name, sounds like “Quickstar” the Amway company) will transfer my queue over, or if I’ll have to re-create my DVD queue again.
Look, Netflix, I understand that you want to go all streaming, but don’t FORCE us to go streaming, just because you want to. Your instant library is SEVERELY limited and if you go all streaming, then you’re no different from Hulu Plus or the like. On the other hand, I don’t want to give up streaming because it is the best way to watch TV series and my kids love it.
I used to promote you, Netflix. Then, I defended you. Now I don’t know if I can even recommend you.
Oh the drama!! I don’t have a problem at all with this. I have both dvd and streaming service and plan to keep them both.
Well, aren’t you just special. You’re probably still a Blockbuster member, too.
Since Netflix won’t carry many classic film titles and insists on believing “Streaming” is available for every citizen across thousands of miles of rural America, it’s benefits to many are zero. Provide WBArchives, MGM Vault, Olive, etc, and then you’re back in classic DVD business. As for “mail won’t exist much longer”, yes, we know that threat. Good luck with that attempt to distract us.
Qwikster !!?? When I first read about this in the morning I thought it was a joke. Qwikster???!!! These geniuses couldn’t think of a better name. It’s laughable. I still have the DVD rental portion but I’m gonna quit “Qwikster” and just keep the streaming. Maybe they should call it ” QUITster ” since so many are quitting their subscriptions.
MAN OF STEEL 2013!!
KNEEL!!
i just hope that, like most people are saying, they are just trying to get people used to the streaming so they can try to do that instead of mailing, which may be more difficult to do with the way the mail is going. plus it takes FOREVER sometimes for netflix to get rights to a movie and then it only gets limited copies. i’ll stick with them for a while longer and see how it goes. plus i have way too many movies in my que to write them all down.
The only thing that seems strange to me is not integrating the websites. The future is in streaming and the company needs to position itself for that fact. It’s just a matter of time before the streaming catalog is bigger than the dvd catalog.
I like Netflx streaming… I use it mainly for watching old tv shows but I do watch the occasional movie.
To me, this was not an apology, as it was presented by Hastings. It was nothing but an attempt to shore up some confidence in stockholders that Hastings actually knows what he’s doing, which I don’t think he does. I think he totally miscalculated the reaction from members. The only thing he said that was completely true is that he was arrogant. If you look at just about any technology business or product, the trend is always toward providing more value for less money. Hastings did the complete opposite of that, then when members complained about this very fact, he simply rubbed our noses in the fact that he runs the business and will do whatever he wants to do. Changing the DVD service to a new business, a new name, new website will only reveal the weakness of the streaming service, which is actually pretty weak. I’ve been a member for years now and I’ve had both DVD and streaming since they offered it. But the streaming has always been a sort of weak add-on because they just don’t offer enough content. My expectation is that Netflix will continue to hemorrhage members and Hastings will eventually be forced out and the mess will be left for the next CEO.
Just wonder if you would be able to have 1 dvd and 1 video game out at the same time? Although it wouldn’t completely justify the price hike it is the least they could do for people that do keep both services. I am fixing to drop to streaming because I hardly ever use the dvd by mail service anyway. To me though they shot themselves in the foot.
In all the tech I see the price constantly rises or stays ‘high’. Until the next new thing or bigger thing comes along. This goes for TVs, phones, computers, etc.
However (IMO) and seeing the general concensus from past articles no one else (before the STARZ jumping) had a better line up at a lower price then Netflix.
Looking at another article (dated 9/2 and updated 9/19) Netflix is still bang for buck your best option.
Besides the inconvience in using two seperate pages to access the same content you previously only had to visit one what is the big deal?
All I hear is I have to pay more money. No one says or dares to compare what is already out there. Some even state that after leaving and checking others it appears Netflix was still worth it.
Anyone?
I think we are spoiled when you come down to it. We have had it ‘cheap’ for so long now and were happy that it was this way. However now when change (probably a necessity on Netflixs part) comes we scream bloody murder and drop the one that has been giving us this underpriced service for so long like a hot potatoe.
Yes Ive tried BB Streaming/VOD and found it very lacking. Some of you may remember I was never on the streaming bandwagon. I had a physical BB (2 actually) close enough by that BB made sense and I liked having a business I could touch.
I did the 7 day trial of Netflix and well the rest is history. Even without the physical disc I find Netflix streaming affordable, stable and very worth the money.
I tried the BB thing (for 30 days I think it was) for a free rental at the physical store or some other promotion. The price per was the same as renting the disk and it was only for 1 (or 2?) days. That means if for some reason I didnt have the time to finish it I had to buy it again.
Anyho I wish someone could come up with a better excuse using a logical model as to why this is a bad thing. Slight inconvience? Sure. Higher then what it was? Of course. Still the best deal in town? I think it is.
No I do not own Netflix stock, nor was I a BB disgruntled employee….
As an FYI I just looked at my Netflix bill. It went from $10.49 to $16.78.
My plan is labled as: Unlimited Streaming + 1 DVD out at-a-time(Unlimited)
So less then $20 a month to roughly (if I turn them in quick enough) get 8 physical discs and unlimited streaming of whatever they offer.
Im still knee deep into a few TV shows, Son and I have yet to finish Avengers (i know I know), and each time my niece and nephew come over (least twice a month) they also have something to watch.
What are other people paying?
Hmm if only Netflix Canada had a larger selection…
It’s really sad to see a company such a netflix go down the tubes but lets face it, their selection sucked. Old TV re-runs and l;ow budget movies wasn’t worth it when I can get new release for $1 at redbox.
Im very disappointed. It’s clear the streaming service has gone to pot. Several months beteween “Newly Added” movies but only a few at that. The list doesn’t seem to change and the garbage they make available is worse than cable TV.
Although I appreciate your acknowledgement, it was still a bad idea and a bad approach. Why not just expand the company and split it into two divisions? Not only have you made people mad by raising prices and making it more complicated, you’ve also just confused people and that’s a great way to lose customers. You know people don’t like to put an effort into anything. I’m internet savvy and I just NOW finally realized i have to go to ‘quickster’. I’ve tried to figure out how to have movies mailed to me on the netflix site and have just decided to give up a few different times since you split. That’s a potential customer you may have had if you just kept it all on the same site. I was one of your FIRST customers and am still streaming even though that selection is VERY limited. If I can ever get my husband to cut back on his cable, I may start a quickster account, but my frustration with what you’ve done really makes me want to shut it all down.