Earlier this week, Netflix announced that it was going to split Netflix’s businesses into two – a business that ships DVDs and a business that streams media over the Internet. This follows on the Netflix’s controversial pricing change where they raised rates for many consumers by 60% by splitting the $10 business and making it two $8 businesses.
On Sunday, Netflix CEO Reed Hastings made things even worse with this announcement on the Netflix blog. He said that Netflix will spin off the DVD business into a business called Qwikster and Netflix would remain the streaming video business.
Here are a few of thoughts I had while reading the blog post:
- Qwikster, really? (Part 1) – I get the name Netflix, it makes sense for an Internet streaming movie service. However, when splitting apart two companies and one is known is for “Instant delivery”, it is curious to call the much slower option a name that implies it is quicker. This is like McDonalds trying to make itself into a healthy food chain and spinning off Double Quarter Pounders into a company called ThinBurger.
- Qwikster, really? (Part 2) – Again, Neflix is aptly named. Qwikster doesn’t imply it has anything to do with movies or entertainment. Qwikster sounds like a name best used to describe Speedy Gonzales as in, “Senor Gonzales es un Qwikster.” (Excuse my Spanish, it’s a first for me on the blog and I’m at least ten years rusty.) I need to update my McDonalds analogy above to ThinHat to make it a completely irrelevant to name to the business model.
- Qwikster, really? (Part 3) – Qwikster reminds me of Napster. You might remember it as the peer-to-peer music service that was shut down due to the illegal trading of music. The Napster brand is still alive as a Best Buy company that few people use. Really, Mr. Hastings? You could choose from any number of names to launch this new brand and this is what you go with?
- Separate Websites – I realize that this is necessary when you splitting businesses. However, many people like to do all their shopping from one place. It’s probably one of the biggest reasons for the success of places like Target and WalMart. Comcast is in my face every ten minutes telling me that I can get my cable, Internet, and phone service on one bill from one provider. Mint has financial management so much simpler buy combining data from many sources and putting it in one place. When I want to watch a movie, I want to go to one place. I don’t want to look at NetFlix, find that it isn’t the extremely limited streaming service and then have to go order it from Qwikflix.
- Separate Movie Rating Services – One of this is two different rating services. The blog post said, “… if you rate or review a movie on Qwikster, it doesn’t show up on Netflix, and vice-versa.” If I’m looking for a movie review, I don’t care if the person watched it on Qwikster, Netflix, or at ThinHat with my burger (come on, it’s catchy, right?). More importantly, what about the sharing of movies with friends. If my friend is a Netflix customer, they should still be able to refer movies to me as a Qwikster customer. Perhaps the other way around isn’t true due to the limited nature of the streaming catalog.
I could go on with a few more points, but I don’t need to beleaguer the point. (CNET has a bunch of articles if you are interested.) It seems like Netflix is clearly passing the torch from the service I use, DVD by mail, to Internet streaming. I think it will be many years before they are able to license the breadth of content and deliver it as 1080P HDTV quality. If they are able to pull that off, I imagine it will be quite expensive as a monthly service – possibly more than a hundred dollars a month.
Bottom line, if the company doesn’t see a future for the DVD service I use, perhaps I should take their cue and cancel, right?