Breaking: Netflix Splits DVD And Streaming Businesses

It's about time. Although their recent streaming offerings have been a pile of outdated crap. The DVD kiosks are extremely popular and cheap ($1). So if Netflix is going to survive the next round, they better offer their streaming customers a damn good selection and value.

decline, well they shouldnt have jacked up their prices. idiots.

Whats bizarre to me is this is the best video they could produce? For a public announcement / apology? Its a 2 billion $ company. This looks like a high school film class- interview your neighbor - job.

can you get Blu Ray on the Redboxes?

Ya, there are Blu-rays at the red boxes

Last Edited by Nathan Drake on 09/19/2011 02:24 AM

doo deys cost more, dem blu rayz?

seems everytime I log into Netflix, or "Netfux" as I call it, all I see to watch are shitty ass third rate B movies

An Explanation and Some Reflections


I messed up. I owe everyone an explanation.

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. I’ll try to explain how this happened.

For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.

When Netflix is evolving rapidly, however, I need to be extra-communicative. This is the key thing I got wrong.

In hindsight, I slid into arrogance based upon past success. We have done very well for a long time by steadily improving our service, without doing much CEO communication. Inside Netflix I say, “Actions speak louder than words,” and we should just keep improving our service.
But now I see that given the huge changes we have been recently making, I should have personally given a full justification to our members of why we are separating DVD and streaming, and charging for both. It wouldn’t have changed the price increase, but it would have been the right thing to do.

So here is what we are doing and why:

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. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to “Qwikster”.

We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

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.

Andy Rendich, who has been working on our DVD service for 12 years, and leading it for the last 4 years, will be the CEO of Qwikster. Andy and I made a short welcome video. (You’ll probably say we should avoid going into movie making after watching it.) We will let you know in a few weeks when the Qwikster.com website is up and ready. It is merely a renamed version of the Netflix DVD website, but with the addition of video games. You won’t have to do anything special if you subscribe to our DVD by mail service.

For me the Netflix red envelope has always been a source of joy. The new envelope is still that distinctive red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be the same for many of you. We’ll also return to marketing our DVD by mail service, with its amazing selection, now with the Qwikster brand.

Some members will likely feel that we shouldn’t split the businesses, and that we shouldn’t rename our DVD by mail service. Our view is with this split of the businesses, we will be better at streaming, and we will be better at DVD by mail. It is possible we are moving too fast – it is hard to say. But going forward, Qwikster will continue to run the best DVD by mail service ever, throughout the United States. Netflix will offer the best streaming service for TV shows and movies, hopefully on a global basis. The additional streaming content we have coming in the next few months is substantial, and we are always working to improve our service further.

I want to acknowledge and thank our many members that stuck with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly.
Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.

Respectfully yours,

-Reed Hastings, Co-Founder and CEO, Netflix

[link to blog.netflix.com]

In NYC Netflix offline as of 6:27am ...

How rare it is to hear someone say that.

I was waiting for them to add video games to the DVD by mail service for a long time, but I just got rid of it and just have streaming.

Crap

Cancelled my membership this morning. I have no need for greedy companies. Netfux is just trying to save face, too late and not enough.

I canceled my entire netflix service when they raised the price. However I am still able to open the site and stream shows. When I click account and settings it just logs me out.

This makes sense, their greed knows no bounds

If you’re like many millions of other Netflix customers, you were probably pissed off when they jacked up their prices last month, effectively doubling the cost of some people’s subscriptions. And before that, you were probably annoyed when they started putting out their DVDs 28 days after they went on sale. And maybe you’re mad now that they’re losing their contract with Starz because they had an argument about money.

It’s almost like Netflix got tired of making money or something. Why do they keep doing all this stupid stuff? Well, simply put, it’s not really their fault. You see, film studios aren’t the biggest fans of things like Netflix, Redbox, or Hulu. You know, those things that allow you to pick and choose what you want to watch when you want to watch it for a reasonable, affordable price. The reason is that it eats into their sales of DVDs and pay-per-view rentals, for which they get a much higher cut of the profit. As DVD sales drop, movie studios panic.

So, instead of adapting their business model to a format that consumers obviously prefer, the film studios would rather try to turn back the clock and take away the distribution methods people love and enjoy. That means demanding more money from Netflix to lease their movies, ever-increasing delays between a DVD’s release and its availability out of Redbox machines, and putting Hulu, a service created by the content creators themselves, up on the auction block when it ended up being too successful. The Time Warner CEO has even taken to blasting Netflix in the press for the last year, describing them as a “fading star.” You’d fade, too, if someone wrapped their hands around your throat.

Movies are just becoming too expensive to produce and I don't understand it since so many things are computer generated these days. One would think with the green screens and computer generated things that those cost saving techniques would flow nicely in this internet world we now live in, but as usual greed knows no bounds.

A basic example of Hollywood Accounting: A studio makes a movie. The studio distributes the movie itself, and although the distributor is technically a separate company, they both belong to the same parent company. Also, the distribution arm sets whatever fees it wants. If they want to charge themselves eleventy quintillion dollars for distribution, they totally can. Then, even if the film earns billions of dollars in box office receipts, they’re still technically in debt (to themselves) and thus haven’t turned a profit.
Sound ridiculous? It happens all the freaking time. David Prowse, the guy who was in the Darth Vader costume in the original trilogy of Star Wars (before being ousted by that douche Hayden Christensen in the special edition) has never been paid for Return of the Jedi because it hasn’t turned a profit after nearly 30 years. That’s after dozens of home video and theatrical re-releases. (All the merchandising money goes to Lucas directly, of course.)
Similarly, someone leaked Warner Bros.’ accounting sheet for Harry Potter and the Order of the Phoenix onto the internet, showing that the film that had grossed about $1 billion worldwide had lost $167 million on paper.

Isn't Qwikster the name of a super hero on Spongebob?

Very interesting. Thanks for the post informing us of how the game works.

Full "apology" from Reed Hastings here:

[link to blog.netflix.com]

I'm done with Netflix and Qwikster can go fuck itself. This is a bad business move in the midst of the "Great Recession."

LoL! Yeah, Quickster was definitely a Spongebob character that only appeared in one episode.

[link to spongebob.wikia.com]

I'm the customer. I don't have to care what kind of hardships the studios are making for the outlets that want to distribute their stuff. I only have to care about what I consider a value and be aware of RAPID changes in cost and service, in this case ranging toward the "abysmal" end of the spectrum. Netflix helped define their own valuation by offering a fixed rate service at a low price, and continued to increase the advantages of using their site for movie descriptions, reviews, queuing, and then even streaming movies without using the mail at all. They set the standard that they now want to reject in favor of something more conducive to executive profits. Oil companies can do that and not bat an eye, because they bring to market a product which EVERYONE needs; they can screw with the general public with impunity, barring severe international government intervention. Not so with an entertainment company. They stay in business only as long as people value them.
The video isn't an apology any more than if someone had just finished stealing your little kid's lunch money and then sat down to "apologize" to you while trying to lift your wallet. Apologies generally have some semblance of contrition, repentance, and an effort to make reparations. This had none of that. It was a new product announcement, and an ultra-crappy one, at that.
And with regard to the "no pricing changes (we're done with that!)" line, it's so incredibly obvious that, if they do beef up their streaming selection, they're going to raise prices. After this, though, the only people who will notice it will be those who selected the streaming-only service. Less bad publicity that way.

If Netflix does not increase their streaming choices they are doomed. Streaming is the future it is just a matter of who controls the best library at the fairest price. Internet televisions are the future, Netflix had the upper hand and fumbled, if Apple would get in the game they could put netflix out.

Just stop watching the dam movies, and stop buying movies. Actors keep getting paid more and more, because fools keep buying their movies and going to the expensive theaters to watch em.