It’s endemic of the times we live in that a cutting-edge tech company that helped upend an entire industry model less than a decade ago is itself already having to combat a changing market. Netflix has long become the outright cultural standard for how we rent movies, and has become the default verb for streaming a film. Whether or not a film or show is “on Instant Watch” more often than not determines if it’s going to get watched at all by a large segment of the population. Netflix has keyed into that, and are already prepared to sacrifice physical DVD distribution to the altar of progress. In fact, they’re herding the lambs and and assembling the ceremony already, and they’re doing it with a little thing called Qwikster.
This stupidly-branded service is something new from Netflix, in the sense that it’s everything old crammed together and split off from the vital streaming service that has a future. Netflix will now be a streaming-only c0rporation as Qwikster becomes an entirely separate company that will manage the DVD shipping infrastructure, curate your queue, provide recommendations, profit off of your habitual failure to send back DVDs, and everything else that you associate with renting movies from Netflix. Meanwhile, Netflix will continue on as the streaming service you know, love, and actually use.
The two service will have entirely different sites, different queues, and will bill you separately. They will also have separate CEO’s, separate books and, most importantly, separate expectations from investors and stockholders.
If this seems baffling, you have only to look at stock problems that Netflix has had recently, as they’ve taken a pounding on the market since the tiered-pricing announcements, and openly expect to lose disc-only customers hand over fist in the coming months. Now it seems a healthy company that is blazing ahead in the streaming market (but having to contemplate every growing competition from Hulu, Vudu, Amazon, Apple, and Google) is finding itself burdened with the cancer of the business that got them started in the first place. The public reaction (because we’re all entitled and stupid) to the pricing split was a disaster and now they’ve got to set themselves up for the future, or be drowned in a crowding market as their brand name becomes tarnished. So what do they do?
Bifurcate the company, cut out the cancerous business model, clean up their books, focus their marketing, and inject a new revenue stream into the slowly dying business… that’s what they do. It’s a shrewd move, but it sends a clear signal about their prognosis for the long-term life of the DVD side of the business. Hell, even in his blog, Netflix CEO Reed Hastings says, “DVD by mail may not last forever, but we want it to last as long as possible.” That’s a nice sentiment, but they’re also not going to let the struggles of a dying paradigm muddy up their spreadsheets any longer.
It is worth mentioning that they haven’t completely set Qwikster out to sea as a lost cause, as they’re now adding video game rentals as potential new flow of customers and revenue. How the pricing and models will work is unclear, but if they integrate games in a way that attracts the Gamefly crowd and new gamers that have never fooled with a by-mail rental service, then that could help give Qwikster a lasting pulse. The gaming industry too seems to be battling waves of change that may peak sooner rather than later, as publishers and hardware manufactures struggle to figure out how to integrate game downloads and how to cut out the brick and mortar middlemen in that market. So even if game discs prove to be a worthwhile venture for Qwikster, the same writing is on the wall there in the long run.
But for pure movie fans that don’t care about the new gaming option and will still want the depth of the DVD library and the convenience of the streaming service, there’s some obvious problems with this whole thing. In his blog, Hastings preemptively apologizes for the obvious inconveniences of having to deal with two companies, two websites, change two sets of info if the need ever arises, and having to rate/curate movies in two queues. Actually, there’s a lot of apologizing in the blog and the Qwikster welcome video. That’s along with the uncomfortable feeling that poor Andy Rendich has been tethered to an unsustainable ship by moving from his position as Netflix COO to Qwikster CEO (I wonder if he’s been guaranteed a position back at the real company if/when Qwikster goes under).
So that’s the long and short of it, and I’m sure you’ve got opinions that I’d love to hear (twitter is good, and the comments are ready for you). Frankly, I think this move makes a lot of sense and will probably be a good one for Netflix proper, even if the name “Qwikster” is transcendentally dumb and seems as sure a sign as any that they are setting this new company up to ultimately die. Otherwise they would have gone with something unifying like “Discflix” and kept the graphic design consistent, instead of…
What’s funny is they don’t even currently control the @Qwikster twitter handle, as it seems to currently be under the control of Jason Castillo– stoner extraordinaire.
So that’s fun. Also fun? The response to the YouTube video above…
More like “SUCKSTER” indeed. It will be interesting to see how this plays out and to track the two companies from here on out. Death to DVDeorome. Long live The New Stream.