Netflix (or is That Qwikster?) Apologizes, Splits in Two, Doesn’t Explain Price Hike

By  |  Sunday, September 18, 2011 at 11:36 pm

I like Netflix. I was a happy subscriber to its DVDs-by-mail service for years. Today, I’m a happy subscriber to its streaming service, which is the form of Internet TV we watch most often in this household. But I’m happiest just enjoying its services–the more attention I pay to the company, its actions, and its explanations for those actions, the more confused I get.

Back in November of 2010, Netflix introduced a streaming-only plan and hiked the prices of service tiers that included DVDs. Then in July, it split up the streaming and DVD services in a way that amounted to a stiff price hike if you wanted both. Its explanation of why it was doing this was oblique at best. Some customers got irate and issued threats involving leaving for Blockbuster–and enough of them apparently made good on their warnings to rattle Wall Street last week.

Now Netflix founder and CEO has blogged to say he’s sorry about not clearly explaining the July changes himself–although not, apparently, about the price hikes themselves. But that’s not his big news. That would be the announcement that Netflix’s DVDs-by-mail service, which has gone by the name “Netflix” since 1998, will soon be rechristened Qwikster. It’ll be a separate division of Netflix, and will add video games to its DVDs and Blu-Rays.

Henceforth, if you subscribe to both the streaming and DVD services, you’ll essentially have to deal with two different companies, with separate plans, separate billing, separate queues, and separate customer service.

Oddly enough, even though Hastings is apologetic for not having personally explained the July price hike, his blog post still doesn’t explain it (or the November 2010 one) in terms that those of us who don’t run large DVD rental/Internet streaming businesses can understand. There’s no “X is going to cost us more, and we’re forced to pass the increase on to you.” Just a lot of stuff about how DVD rental and streaming are different, and why it’s important that Netflix err on the side of change rather than complacency. Why that translates into higher monthly rates, Hastings does not say.

(Over at the Atlantic, Derek Thompson has a more direct explanation than anything Netflix is saying itself: Hollywood is going to want more money for its content.)

How about that name change to “Qwikster,” a moniker that already sounds slightly stale even though the DVD service hasn’t started using it yet? As best as I can figure it out, Netflix has the burden of having a very well-known, very popular legacy business whose days are clearly numbered. It doesn’t want you thinking about those iconic red envelopes when you think “Netflix”–it wants you to think streaming services, period. So Netflix will only mean streaming from now on–a move which will force millions of consumers to learn a new name for an old service, and which may slightly inconvenience anyone who pays for both the discs-by-mail and streaming. There may be long-term benefit here–Hastings says it will help Netflix be great at streaming and “Qwikster” be great at discs–but for now, the company has just announced further complications for its customers.

(As for whether people really will start calling Old Netflix by the new name “Qwikster”…well, good luck, Mr. Hastings: I bet a lot of them will simply continue to call it Netflix.)

Mind you, I like Netflix and am rooting for it to do well for many years to come. I sympathize with its challenges, and think that it’s performing a pro-consumer act by doing much of the heavy lifting of bringing entertainment into the digital age.

But I do wonder: What if it had announced and clearly explained the pricing that’s now in effect–and, if it’s really necessary, this “Qwikster” business–all at once last November?

 
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8 Comments For This Post

  1. Tom Gibson Says:

    This split makes a lot of sense if the streaming side of the company is setting itself up to be bought by another company interested in entering the streaming market but not interested in mailing DVDs.

  2. Jennifer Webb Says:

    Netflix's streaming selection is horrible. I'd rather use services like TVDevo that offers more streaming options for no monthly fees. Better solution.

  3. Aaron Says:

    Maybe a giant merger: HuluFlix?
    Or, Amazon Prime Instant Netflix Video?

  4. Dave Says:

    Their TV streaming selection is very good for past seasons — both American and British. Their movies are just fair.

  5. Not Tom Says:

    Tom, you meant that Qwikster, “the [DVD] side of the company is setting itself up to be bought.” If not, then you’re a gd modern day moron.

  6. john Says:

    85% of movies provided by Netflix go into their movie rentals. Most of the movies they have on streaming are third rate B movies with unknown actors. I'm going to give nutflix the boot!

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