By Kevin Jagernauth | The Playlist September 19, 2011 at 7:04AM
Company Splits In Two; Creates Qwikster For DVDs, Keeps Netflix For Streaming, Makes Users Sorely Confused
Good Lord, Reed Hastings. What were you drinking last night?
The Co-Founder and CEO of Netflix bombed subscribers' inboxes this morning with the most baffling email users have received from the company ever, putting a cap on what has been a tumultuous 2011 for the video service. Earlier this year, Netflix, who reported having 23.6 million subscribers in April of this year, jacked up prices in a hugely controversial move that scared Wall Street when it was revealed late last week that the service was expecting to lose 1 million subscribers as a result. This caused a nearly 20% drop in stock prices for the company. Panic! The solution? Splitting the company in two with one half now dedicated to streaming only, the other to DVD-by-mail. Yeah, we know. You might want to break out the aspirin.
So this is how it will break down: Netflix will now just be for streaming content only, with the newly unveiled Qwikster (awful name) for your DVD needs. That's right, before where you could get all your movie needs under one roof, now you'll have to deal with it from two separate places. Great work, everyone. Here's what Hastings had to say in his email:
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, but now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.
When exactly this transition will happen isn't clear, but seriously, making users manage two services instead of one is a massive #customerservicefail. Will you be able to move your Netflix queue over to Qwikster? What if one month you're going to away to the cottage and just want DVDs, will you be able to switch over for that month? So few answers in Hastings' overly long email (and video) and so many more frustrating questions that remain to be addressed. But in the history of poor communication with customers, and terribly integrated service changes, this Netflix/Qwikster debacle has to be near the top of the list. If you can't explain it in less than 13 paragraphs, don't expect us to understand it, Reed.
All of that said, from a business world perspective, this all makes perfect sense. Hastings has long seen streaming as the future of the business and their current dealmaking and power plays have pointed toward growth in that arena. You can bet the company's recent pick up of the David Fincher/Kevin Spacey series "House of Cards" is going to be a major anchor in their streaming biz and will just be the tip of the iceberg as Netflix flirts in the world of being a cable company. Also, DVD mailing as a business will only be financially viable for so long and splitting those costs/expenses/etc into two companies means they can budget accordingly and if/when that service is eventually phased out it won't be at the expense of the more lucrative streaming entity.
So here we are, six paragraphs from where we started and still befuddled by Netflix's bull in a china shop approach to change. Here's the video of Reed Hastings talking about the future of the company. We have to admit, it's so cringeworthy and embarrassing, we couldn't make it through the whole thing.