Netflix splits DVD and streaming business into separate companies, adds games

kuntasensei

Netflix made waves a few weeks ago when it split its streaming and DVD-by-mail services into two separate plans with separate prices, but these measures were apparently more preparatory than reactionary, it seems. Netflix CEO Reed Hastings has announced that the movie megalith's DVD-by-mail division will be separated from its streaming services and spun off into its own company: Qwikster.

Qwikster, which will officially launch "in a few weeks," will be a completely independent entity from Netflix; the two services will not integrate in any way, meaning two different websites, two different accounts, and two different bills. What's truly out of left field, however, is the fact that Qwikster will also offer PS3, 360 and Wii titles by way of a "video game upgrade option" similar to Netflix's existing Blu-Ray upgrade system.

Despite the fact that Qwikster will be its own corporate entity with its own CEO, Hastings stresses that the transition is "merely a renamed version of the Netflix DVD website, but with the addition of video games." It will be interesting to see how the service fares without Netflix's all-powerful brand recognition, and what impact (if any) the change will have on other game-by-mail services like GameFly. For now, we just hope this news somehow translates into more SGT. Frog episodes getting added to Instant Play.

http://www.joystiq.com/2011/09/19/netflixs-dvd-devision-renamed-qwikster-adds-games-by-mail/

heiney9

More stupidity from Netflix, they had a great thing going and now the CEO is apologizing all over the web for raising prices and he vows no more price hikes??? WTF, that's easy to say after you raised your prices 66%.

Now trying to "soften" the blow after many have made a mass exodus they are spinning the DVD section off into a seperate entity, like we are all that stupid. Now this means two services, two auto debits, two queue lists to manage on two different sites.

What an 'effing mess. Reed Hastings should step down and let someone who knows how to run a company take over. I was ready to ride the price hike out, but now that I have to join two seperate services and manage two seperate accounts, eff 'em!

H9

maximillian

For me the price increase wasn't that bad considering the apparent value I received from the service. However, splitting the service into two websites seems stupid. I like being able to search one website and then being offered how to view the content. Now, if a movie is not on the streaming website I have to go over to the DVD version. It would seem also, that ratings for movies would have to be separate from both sites too. Who knows what other integrated features would have to be split. This just seems annoying.

bobman1235

maximillian wrote: »

For me the price increase wasn't that bad considering the apparent value I received from the service. However, splitting the service into two websites seems stupid. I like being able to search one website and then being offered how to view the content. Now, if a movie is not on the streaming website I have to go over to the DVD version. It would seem also, that ratings for movies would have to be separate from both sites too. Who knows what other integrated features would have to be split. This just seems annoying.

Yup. The price hike was fine by me - I'm not rich by any stretch but five dollars a month is a couple cups of coffee for christ's sake - but this just makes my life more difficult. Breaking the ratings system (arguably one of the best parts of Netflix, as it's so often right), and separating the queues so they can't talk to each other?

Obviously Netflix is just trying to sell off the DVD mailing portion of the business and focus solely on the streaming. It'll be a lot easier to sell off as its own separate entity...

cfrizz

Too little too late most likely. I love how he said:

"In hindsight, I slid into arrogance based upon past success."

Well that arrogance pissed people off big time & they decided to hit him where it would do the most damage...right in his wallet!

Times are tough for people, and when already thriving companies decide to get greedy people are going to lash out.

Better to keep what you have going strong, rather than to get greedy and lose ground that you may never get back.

As H9 pointed out, people aren't stupid, you can split the company 10 different ways to Sunday, but it was the 66% price increase that pissed them off. And since the price increase stays in effect, so will peoples desertion of Netflix.

Justice has been and will continue to be served.

maximillian

Found this via Slashdot...

http://blog.netflix.com/2011/09/explanation-and-some-reflections.html

Love one comment that asks about searching for a movie on one site and automatically being referred to the other if unavailable. The response:

Reed Hastings, "ouch. You'd have to search the second place if we didn't have it in the first place. "

And further down, "We already have two queues. The two "sites" are a click between each other, so we think not that much different than two tabs on one site. "

Fail. It will not be one click different. One would have to re-type the movie title in each site's search field. Elsewhere this guy says that ratings will be the same initially but then diverge.

Apart from a possible sale of one of the businesses I don't see how this makes sense.

bobman1235

It honestly cannot be for any other reason than to try and sell one side off.

heiney9

Now that it's going to be more inconvenient with two web sites and two services I AM pissed about the rate hike. Not only do I have to pay more, but now I have more inconvenience.

I think Reed Hastings should be nominated for the Darwin Award. What a first class putz!

H9

AsSiMiLaTeD

I agree with Bob, obviously they're going to try and sell one side of the business. I think it's a dumb idea though, I don't know what the hell they are thinking over there at Netflix but this HAS to be a bad decision.

Unlike everyone else who freaked out of the extra $5 a month, I was fine with the price increase - it's still an absurdly good deal even at the new prices.

But this is different, now I'm dealing with two different companies, have two different debits, and most importantly have two different websites that I have to deal with now.

Price increase? Fine I'm good with that as long as the price is still reasonable. THIS is dumb though because now you're making my life more difficult than it needs to be. I don't know if they'll lose me over this, but now I'm at least entertaining that option whereas before I wasn't even considering it.

I'm already paying for Amazon Prime anyway, so if I'm going to need to manage two websites AND they have as good a selection of streaming material, I may as well use Amazon and save my $8 a month.

Outfitter03

1. quickster
Being able to get girls in the sack quick.
Did you see that quickster in action? It only took him 5 minutes to get that girl to his bedroom.


From the Urban Dictionary. Most likely from combining the terms Quicky and Trickster.

A fitting name for a new company. Unfortunately the existing rental service is getting stuck with this name and Netflicks is going with the streaming service proving that Reed Hastings is THE Quickster

txcoastal1

Rumor has it that Amazon may purchase Hulu, for movies I like the quality of Vudu although they are owned by the devilish Walmart

markmarc

I can understand why they are splitting the company into two. The mail division can eventually be sold off or closed down once streaming becomes truly high quality visually and universal in both service and usage. We dumped the streaming because the picture and sound quality was no better than VHS at best. But not being able to have one statement charge under the parent company name is pretty clueless. I can see business schools devouring this cluster#$%& as a case study come spring semester.

kuntasensei

Streaming won't take over until ISPs remove the ridiculous bandwidth caps. Until then, there's no room for Netflix to grow beyond what it is now, as it will put a large number of people up against the limit of their service. Let's hope the FCC steps in at some point and makes these stupid limits go away, because ISPs are using them to essentially stifle innovation.

BlueFox

The funny part is DVD mail rental is what they do best. They have the logistics all in place, and all the kinks worked out. Of course, they want streaming since it is lower cost (more profit), but it is a trivial task. Look at all the others doing streaming. Nothing to it. The hardest part is licensing content to stream. Anyway, for me I got a price decrease since I just want DVDs, and one web-site regardless of its name is no big deal.

AsSiMiLaTeD

Keiko wrote: »

I got that apology in my email this morning. I'm done w/netprix. Reed Hastings is a greedy, ignorant f-tard and is getting exactly what he deserves.

Your ridiculously personal hatred of netflix is likely unhealthy. Seriously its not like the guy is murdering orphans or something...

AsSiMiLaTeD

kuntasensei wrote: »

Streaming won't take over until ISPs remove the ridiculous bandwidth caps. Until then, there's no room for Netflix to grow beyond what it is now, as it will put a large number of people up against the limit of their service. Let's hope the FCC steps in at some point and makes these stupid limits go away, because ISPs are using them to essentially stifle innovation.

do you realize that most isp don't have a limit? Seriously I've never even heard about them having limits except in your posts. Cellular providers are a different story, but home isp providers don't impose a limit, at least not in any part of the country I've been in.

jbooker82

Yea they do have limits. Most people never hit them. Normally you will just get warnings from your isp. How long do you think it will be before isp start charging on a bandwidth use basis?

jbooker82

Netflix is just betting that people prefer convince over quality. I prefer 1080p, and DTS-HD with no buffer time. I wonder how streaming will work in the future when 4k resolution is the next new thing?

billbillw

AsSiMiLaTeD wrote: »

do you realize that most isp don't have a limit? Seriously I've never even heard about them having limits except in your posts. Cellular providers are a different story, but home isp providers don't impose a limit, at least not in any part of the country I've been in.

I know that some of the biggest ones do. Comcast, ATT for sure. I've got ATT and its 150GB per month. I've never hit it, but I don't really stream HD movies. As such, I've hit close to 80GB. The limits are a real hindrance to streaming services.

BTW, I cancelled the DVD portion of Netflix last week because I was down to only 10 movies or so and I wasn't too worried about seeing any of them. I kept the streaming for now until I can catch up watching a few shows. I though I would still be able to manage my DVD queue, but it totally disappeared. Not happy about the news of splitting the companies.

bobman1235

txcoastal1 wrote: »

Rumor has it that Amazon may purchase Hulu, for movies I like the quality of Vudu although they are owned by the devilish Walmart

A LOT of people are rumored to be interested in Hulu, including Amazon, Apple, and a few other big names I can't remember.

txcoastal1

They split the company because most probably because the stock to a nearly 40% tank since July and the delivery service yields the highest burden of overhead....its a numbers game not necesarrily customer service game. Instead of bowwing down and lowering the prices he decided to toss the anchor over board.

heiney9

kuntasensei wrote: »

Streaming won't take over until ISPs remove the ridiculous bandwidth caps. Until then, there's no room for Netflix to grow beyond what it is now, as it will put a large number of people up against the limit of their service. Let's hope the FCC steps in at some point and makes these stupid limits go away, because ISPs are using them to essentially stifle innovation.

Not so much to stifle innovation as to create another revenue stream by giving customers a limit and then charging more if they go over that arbitrary limit.

BlueFox wrote: »

The funny part is DVD mail rental is what they do best. They have the logistics all in place, and all the kinks worked out. Of course, they want streaming since it is lower cost (more profit), but it is a trivial task. Look at all the others doing streaming. Nothing to it. The hardest part is licensing content to stream. Anyway, for me I got a price decrease since I just want DVDs, and one web-site regardless of its name is no big deal.

Another HUGE problem with streaming I've noticed just with CP users is the complete lack of consistency based on method and device used to stream. For example markmarc's comment about how his streaming is no better than VHS. When I read that last night I was streaming an episode of Lost in 720p HD, so obviously his device and or ISP doesn't allow for the same streaming quality I always get. If people continue to perceive the streaming as wholly inferior and blame Netflix for it, they will never get ahead.

H9

heiney9

Actually for me, the streaming part of Netflix has become much more important than the DvD portion. I watch so many TV series, documentaries and I'm a huge Independent Film viewer. I have twice as many selections in my streaming queue than I do in the DVD queue. But at the same time if I want to watch a current movie it's nice to have the 1 DVD plan for that option. So after my outrage of the price increase I had finally reconciled that for $15.98/month it was still the best option I could find and then they go and 'eff it up by splitting the two services and causing more inconvenience.

H9

RuSsMaN

Love Netflix. Streaming only, couldn't be happier with it.

txcoastal1

I cut Comcast TV ordered small Direct TV package, subscribed to Netflix, and Hulu+, and watch an occassional movie on Vudu, and got rid of my Tivo...now my overall bills are lower and I get to watch pretty much whatever I want for about $30 less per month

No problems here

kuntasensei

AsSiMiLaTeD wrote: »

do you realize that most isp don't have a limit? Seriously I've never even heard about them having limits except in your posts. Cellular providers are a different story, but home isp providers don't impose a limit, at least not in any part of the country I've been in.

Actually, most ISPs have a limit, and they never tell you about it until you're over it and being charged or kicked off completely. AT&T's DSL service now has a 150gb cap, with their UVerse service having a 250gb cap (these were formerly 80 and 150). Comcast has a 250gb cap, which you would think is generous... but with the people and devices in my home, I regularly hit ~230gb/month. The danger with Comcast is that if you hit the limit twice, you're banned for a year with no chance for appeal. Charter has a 100gb cap for their basic service, which is ridiculous, and a 250gb cap on their premium service.

The reason you've never heard of it before recently is because Netflix wasn't a problem for them before their streaming service became so popular. Several of these companies have gotten in trouble for throttling traffic specific to competing companies (because they don't want services like Netflix cannibalizing their cable-TV offerings) in the guise of combating P2P piracy, and while the FCC was quick to make throttling of these services illegal, they left a big loophole wherein ISPs can set arbitrary transfer limits with no justification whatsoever. Netflix has had to implement software that better uses bandwidth (and lets you set quality levels manually) to combat these artificial limits.

That's the thing though... As you've illustrated, many people have no clue these limits exist, which is why they're so dangerous. They not only create problems for companies like Netflix, they stifle innovation in activities like telecommuting and cloud-based backup/storage. The usual reason people go over this limit is using online services like Carbonite to back up their files in cloud storage, and as more people begin to use services like this (since cloud computing is getting a major push) and Netflix, these limits imposed by ISPs are going to become a problem for more and more people. Of course, the ISPs cry that it takes additional resources and costs them more... but the truth is that they have rolled in the profits for years without any significant advancement in the network infrastructure. That's why Comcast's highest speed is 50mbps, whereas many countries supposedly behind us in technology have 100mbps service across the board. That said, even if you pay extra for Comcast's 50mbps service... your bandwidth cap is still 250gb. So you can get things faster... but it's irrelevant, because you can't get any more than anyone else.

brgman

We dumped the DVD end but kept the streaming.My wife and kid use it all the time.Usually if i have 2 hours to kill i will listen to tunes.Not much on movies.
I think Netflix opened themselves up to anyone ready to pounce though.Like Amazon or Vudu.They should take advantage of the situation.Lots of people pi$$ed at Netflix.

exalted512

I got the email too. It said:

blah blah blah
we will rename our DVD by mail service to “Qwikster”
blah blah
Qwikster.com and Netflix.com websites will not be integrated.
There are no pricing changes.
blah blah blah.

Idiots.
-Cody

polkfarmboy

kuntasensei wrote: »

Actually, most ISPs have a limit, and they never tell you about it until you're over it and being charged or kicked off completely. AT&T's DSL service now has a 150gb cap, with their UVerse service having a 250gb cap (these were formerly 80 and 150). Comcast has a 250gb cap, which you would think is generous... but with the people and devices in my home, I regularly hit ~230gb/month. The danger with Comcast is that if you hit the limit twice, you're banned for a year with no chance for appeal. Charter has a 100gb cap for their basic service, which is ridiculous, and a 250gb cap on their premium service.

The reason you've never heard of it before recently is because Netflix wasn't a problem for them before their streaming service became so popular. Several of these companies have gotten in trouble for throttling traffic specific to competing companies (because they don't want services like Netflix cannibalizing their cable-TV offerings) in the guise of combating P2P piracy, and while the FCC was quick to make throttling of these services illegal, they left a big loophole wherein ISPs can set arbitrary transfer limits with no justification whatsoever. Netflix has had to implement software that better uses bandwidth (and lets you set quality levels manually) to combat these artificial limits.

That's the thing though... As you've illustrated, many people have no clue these limits exist, which is why they're so dangerous. They not only create problems for companies like Netflix, they stifle innovation in activities like telecommuting and cloud-based backup/storage. The usual reason people go over this limit is using online services like Carbonite to back up their files in cloud storage, and as more people begin to use services like this (since cloud computing is getting a major push) and Netflix, these limits imposed by ISPs are going to become a problem for more and more people. Of course, the ISPs cry that it takes additional resources and costs them more... but the truth is that they have rolled in the profits for years without any significant advancement in the network infrastructure. That's why Comcast's highest speed is 50mbps, whereas many countries supposedly behind us in technology have 100mbps service across the board. That said, even if you pay extra for Comcast's 50mbps service... your bandwidth cap is still 250gb. So you can get things faster... but it's irrelevant, because you can't get any more than anyone else.

Thats a great post and it opens ones eyes

toucanet

As one Twitter user put it: "Qwikster, noun: The sound of several million Netflix subscribers clicking on their mice to access the 'cancel my account' page."

bobman1235

Keiko wrote: »

No, of course not. He just cut his own throat.

I'm sure he'll cry himself to sleep on a bed of gold.