Netflix Announces DVD-Streaming Split, Forgets to Check If @Qwikster Is Taken
Late Sunday night, Netflix CEO Reed Hastings took to the company's official blog to explain further the recent news of Netflix's streaming-DVD service split and pricing changes with yet another announcement: Within a few weeks, Netflix will split into two companies, keeping its name for streaming-only services and separating DVD rentals into a new separate company called Qwikster.
Hastings announced the Qwikster news with a mea culpa for shocking Netflix users earlier this summer with sudden price hikes, describing his and the company's thinking in detail:
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".
Under the new system, users will have to visit Netflix and Qwikster websites separately in order to use both services, as the two companies will not share information or be integrated. Inconvenient for most customers? Sure. Good news for gamers, who will soon be able to rent video games? Yes. End of the world for DVD-renters or streamers? Surely not, right? (Those pricing hikes announced last July, however, might be deal-breakers for many current customers.)
In any case, it seems Hastings and Netflix and ex-Netflix head Andy Rendich (now the CEO of Qwikster) are A) extremely apologetic to Netflix users (though the new prices remain in place) B) moving ahead quickly on the Qwikster front. They promise the split will take effect within a few weeks. By then, will they have wrestled the Twitter handle @Qwikster away from the guy who currently has it who has a picture of Elmo smoking weed as his avatar? (Hat tip to @ryangallagher.)
• An Explanation and Some Reflections [Netflix blog]