Netflix CEO Reed Hastings left a present in subscribers’ email inboxes last night. It reads, in part:

It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to ”Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name ”Netflix” for streaming.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

Dw. Dunphy: It’s to be expected. Over the past couple months, the company went from corporate killers to pariahs. Qwikster might reverse that, but in that span I wonder how many alternatives people found beside Netflix? RedBox? Free streaming sites?

Ken Shane: The only effect that this email had on me was to make me more annoyed  than I was before. I gave up the DVD option a few weeks ago and went all streaming. Since then I have realized just how weak their streaming collection is. I thought that when they announced the changes they would really step up the number of streaming entries, but they haven’t done that in any significant way. As someone who doesn’t go to the movie theater very much anymore I now have to wonder how I will see new films when they’re released on DVD but not for streaming. It’s a mess, and each day that goes by brings me closer to dumping Netflix altogether. I also subscribe to Hulu Plus. At least they have the Criterion Collection, which means hundreds of great films available for streaming.

Matt Wardlaw: I kept the streaming and simply rent new movies via Amazon’s streaming service. It’s more convenient and instant for me and the reality is that like many others, I watch a lot of movies one month and then nothing the next month. So the “pay as you go” Amazon model works better for me and I tend to rent a lot of the movies that they offer up as $1.99 weekend specials, so I see a lot of the new releases at a discounted price.

Kelly Stitzel: I guess I’m not as annoyed about their shenans as everyone else seems to be. However, if this split means my 400+ queue of DVDs disappears when Qwikster starts, I’ll be very irritated. That said, as a marketing person, I think they’ve handled all of this terribly. And Qwikster is a really, really dumb name. Like, that’s the best you could come up with?

Dave Lifton: All this is proving my belief that the only entertainment option where it’s better to rent than own is women.

David Medsker: I’m sure the studios were not about to endorse Netflix running new releases via stream, since they certainly count on that big block of DVD sales for their bottom line. I bet Netflix wanted to get rid of the DVDs, and the studios forced their hand. At which point, Netflix realized that they were boned.

Brian Boone: Didn’t Amway try to kill the bad associations with its name a few years ago by renaming itself Quikstar?

Jeff Giles: Reed Hastings is starting to remind me of that baker in the old Sesame Street shorts who announces how many pastries he has and then falls down the stairs.

Kelly Stitzel: Looks like someone forgot to lock up the Qwikster Twitter handle, too.

Dw. Dunphy: The name Qwikster makes me thirsty for chocolate milk.

Scott Malchus: They really shouldn’t have split apart.  Like Ken said, people are going to quickly see how limited Netflix’s vaults are with new streaming material. What surprises me is that Blockbuster has not been able to capitalize on this.

Dunphy: Blockbuster has damaged itself so badly by slamming shut the majority of their brick & mortar stores, I think people wouldn’t be too ready to jump onto mail rental with them. Two reasons: the first is that a lot of people don’t realize Blockbuster hasn’t completely gone under. The second is that, for those who do know they’re still around, there might be lingering concern with getting into a relationship with a company expected to crumble eventually. They may not lose subscription money out of it, but they would get comfortable with something that suddenly changes on them…kind of like what’s happening with Netflix right now.

Matt Springer: I don’t understand what the big deal is, I honestly don’t. I’m trying hard but I don’t get it.

I cannot imagine a scenario when I would go to Netflix and NOT find something I want to watch. If I want something that isn’t in their library, I can rent it from a number of outlets, from iTunes to Amazon to freaking Facebook. If you’re at all savvy, which I think most of us are, you can get anything you want for FREE within fifteen minutes through filesharing.

They have thousands of movies and TV shows. I could sit down right now and watch nothing but my queue for 24 hours a day and it would be a month or two before I was caught up.

If you ask me, their biggest mistake wasn’t raising prices, or splitting the business…it was letting the prices stay so low for so long. It’s still the best deal in entertainment, short of stealing shit off the internet, which I am also wont to do. Even if you join both services for eight bucks a month each, that’s $16 a month. In most areas, you can’t even buy two tickets to ONE movie at a theater for that much, let alone access all that content with a few clicks anytime and for as long as you want.

I’m not trying to be contrary, but fuck it, I AM CONTRARY.

From a corporate perspective, I agree with Kelly in that the communication strategy on some of this has been lackluster. At the same time, there’s no good way to do this. People are going to complain no matter what…again, I think that’s because the prices were too low for too long, not because what you get for what you pay is really a poor value.

Otherwise, I think this Reed Hastings dude is pretty sharp and is making all the right moves for the future of his business. He is getting serious blowback from a small, vocal minority of people who are into movies, are accustomed to getting whatever they want for nothing or less, and have the means to yell loudly via the internet. That’s not his main market and he knows it. Netflix and whatever the other stupid thing is called will weather this storm and emerge stronger. It’s growing pains, nothing more.

(Before anyone posts it, yep, I heard they just lost a bunch of subscribers. When you have 26 million and you lose 1 million, I wouldn’t call that “droves.” And you know who that 1 million is? It’s us. It’s the loud complainers who will just steal more instead of paying this nominal fee for what’s still a pretty terrific service. As technology catches up with the non-early adopters, the numbers will grow on their end and the grumblers will continue to grumble without having access to Netflix. Their loss.)

The only place I can see real weakness is in licensing content from the studios. In that sense I wouldn’t be surprised to see some mergers or acquisitions down the line to strengthen their position on that front. Long term, Netflix will get into the content business and that will make things very interesting. They’ve also never really been great at the user experience, aside from the actual streaming, so it might behoove them to create a simple connective bit of code between the Netflix and Quikster queues, but I doubt they’ll do that, which is stupid since it seems so easy.

I have no interest in the DVD business myself, but I’d pay twice as much as I’m paying now for Netflix instant and still feel like I’m getting a great deal, even WITH the loss of the Starz content coming in February. Hell, last night during the Emmys I said to my wife, “We should watch Friday Night Lights.” Five minutes later, it was in my queue. Four seasons of television…that’s weeks, maybe months of our viewing time sorted. A bargain at twice the price.

Dunphy: Like I said before, it is not about the material, but the relationship. People thought Netflix was one thing, then it was another and people felt spurned. Marketing is more than delivering the product. It’s about hitting your comfort zone, and Netflix’s games made a lot of people uncomfortable.

Springer: What “games”? They changed their pricing, and now they’re restructuring their business. It’s pretty clear. A “game” would be changing the prices, and then hiding the information about it under a rock in Nova Scotia, and creating a series of clues that people had to use to track down the information about the price change.

In a sense I get what you’re saying–the way I see it, Netflix was a small upstart that could somehow keep all this afloat and seem like the cool uncle who always brought good weed to family parties. Now the cool uncle has a button-down corporate job and even though he still brings weed, it’s not the good stuff, or something. I’m not satisfied with that analogy.

Their product is essentially the same as it’s always been. It just costs more and now there’s a stupid new name for part of it. If it honestly doesn’t meet your needs, it didn’t ever meet your needs. Again, that really surprises me, but maybe it shouldn’t. We’re the power users–I’m the kind of guy who actually finds holes in an 11-million-song library on Rdio or some shit. I guess it makes sense some of us might feel dissatisfied with a streaming library full of thousands of movies and TV shows, because some random movie from decades ago isn’t there. If I want to see a random movie from decades ago, it’s not like I can’t ever find it. I just can’t find it on Netflix. I’m satisfied with what I get for what I pay, and I expect to feel that way for a long time.

I would bet a crisp American dollar the average person does NOT feel the Netflix library is inadequate, or that they’ve been jerked around somehow because the pricing changed. They may hate paying more, who doesn’t? But they’ll either pay more, or drop the DVDs, or just go on streaming as they have been because the DVD is going the way of the VHS.

Dan Wiencek: This change really doesn’t effect me very much. When they pulled their price increase last month, my wife changed her account to all-streaming and I changed mine to all-disks (their streaming library isn’t nearly good enough to abandon discs). So already it was as if we were dealing with two separate companies; this just means I have to manage my account through a new website.

I am willing to bet that by this time next month, there will be a third-party search engine that can tell you whether a title is on Netflix, Qwikster or both. And I think you’re dead on about Netflix’s streaming selection being perfectly adequate for most people, given how many people evidently love Redbox.

Dunphy: Redbox feeds on lowered expectations. It is a box and, as such, has a finite amount of space to hold things. People can accept that. What they cannot accept is an internet service that has just as much a finite selection, even if it is huge. What people are saying is that Netflix’s stream selection should be comparable to Nestles Quikster (yum). Their expectations and realities are not aligning and that’s a huge marketing problem.

As for the “games’ I spoke of, Netflix as a company should have been eminently aware of this disconnect before they instituted the change, but chose to risk it. I consider that a game or, at the very least, a knowing gamble. It crapped out.

Chris Holmes: So does Qwikster take its place as the dumbest company brands in recent memory? Another that comes to mind is Comcast’s Xfinity, which sounds like something they did on The Office.

Brian Boone: Halliburton changed its name to XE, to eliminate all the negative associations and feelings that went along with being Halliburton.

And of course, Sci-Fi became SyFy.

Dave Steed: I also think MTV Tres rebranding to simply Tr3s was a dumb call. Who doesn’t recognize the MTV name?

Chris Holmes: As mockable as SyFy is, it at least makes business sense since Sci-Fi can’t be trademarked.

Zack Dennis: As ridiculous as the SyFy transition seemed at first, in retrospect it doesn’t seem like such a horrible idea after all to me.  It actually fits better with the goofy, soft science fiction programming that is their bread and butter these days.

Jack Feerick: Way worse than SciFi / SyFy — but a blatant attempt to ape it — is the recent switch of the mystery-oriented cable network Sleuth to Cloo.

Dan Wiencek: I’d like to announce the launch of my new movies-based cable channel, MÁ¼veze.

Dunphy: Sorry, too close to Muvi.com.

Kelly Stitzel: Philmz?

David Medsker: Seeing that makes me think of Phagz on 45. And now I’m sad.

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