September 19, 2011

Qwikster, your new dvd by mail provider

When you say "Netflix" most people probably think of dvds by mail. Alas, it is no more. Netflix is all about the streaming now. They have spun off the dvd mailing business into a new thing, called Qwikster. I have to believe they came up with the name in a 15 minute meeting.

 They didn't even go to the trouble of procuring the twitter handle that went along with new service. See @Qwikster. Qwikster seems like an afterthought. It seems to have been conceived to almost drive away customers from the old way of doing things. I'm not confident that the service is going to be around for a real long time.

When I checked my email this morning I was surprised to see a message from my old buddy and CEO of Netflix Reed Hastings. I read through it and thought how cool Netflix was... how I have been a subscriber to discs by mail for over 6 years, and I was a little sad to be canceling it. Then he got to the Qwikster part. Then I was thinking... did he just launch a new brand in the 5th paragraph on an apology email? I understand why they had to differentiate their business. I even understand why they had to create distinct pricing plans for the dvds and streaming. I didn't quite understand why they felt the need to create an entirely new brand and totally separate the websites... until I thought about it for a little bit. It still doesn't make any sense, but there has to be a reason.

Technology has outpaced the dvd's by mail system. Waiting for discs and walking to the mailbox is too much trouble in a world where we can just beam everything straight to our TV. The future is streaming, but Netflix still had this expensive infrastructure and fading business model that they had to get rid of before they coulee really be considered a true "streaming only" company. I think they are ditching the dvds. I can't see that service lasting more than another couple years. By the time it dies Qwikster will no longer be associated to Netflix, and nobody will care.

The best part of Netflix going all-in on streaming is that their library of content can only improve. I love their streaming service. I wish everything were available on there, but they have a long way to go. They don't have new releases on there yet, and that is okay with me. I'm fairly happy with their selection for now, though I do fully expect it to expand over the next several months. Now if they can do all that without jacking the price on us again, that would be even better.

Changing over to the all streaming all the time does have some drawbacks. Netflix owned the dvds. No matter how much the movies studios might cringe to think of it, once they bought those discs they could do pretty much whatever they wanted. Netflix doesn't have that luxury with the streaming service, and they will always have the struggle of renewing licenses. Their success will be (partially) in the hands of other companies. If a major studio wants to, they can take their content away from Netflix and leave them out in the cold.

I don't think that will happen. Netflix has too much traction. When Netflix realized they had to get from an all dvd to all streaming they set a course. This is just one of the final steps in that transition. They knew it was going to be a bumpy road, but they went for it. They probably made some poor decisions along the way, but they are in the home stretch. The metamorphosis is almost complete and hopefully the blunders are over. I'm still a Netflix customer for now, but I doubt I will ever be a Qwikster customer.

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