Netflix co-founder and CEO, Reed Hastings, sent out an early morning message to apologize to Netflix subscribers about the handling of the recent price increase (video below). He also announced a more formal splitting of the DVD-by-mail and streaming businesses. The DVD business will be renamed to Qwikster while the streaming business will continue to be called Netflix. For customers, there will be two separate websites, two separate queues and two credit card charges.
The move doesn’t surprise us and the Hub sees this as yet another stick to beat customers away from DVDs. In that post, we stated how Netflix thinks the future is in streaming and is doing everything they can to get customers to discontinue the use of DVDs. The latest move move may signify Netflix wants to spin-off Qwikster. Alternatively, maybe the impetus was from the studios themselves, who put pressure on Netflix to get out of the DVD business. My gut is that licensing streaming content is more lucrative for them instead of having Netflix buy a bunch of DVDs.
While Netflix is attempting to spin this as a positive change, it doesn’t feel that way from the customer’s point of view. The change brings the loss of convenience and therefore, value. Now, a customer has to look for titles on two separate websites. In a related move, Netflix also has started to hide titles from customers’ instant queues if they have expired and the visibility on which titles are about to expire in your instant queue. As our friends at the Streaming Media Blog just pointed out, Netflix has once again told us how the loss of functionality is actually good for us. What was an opportunity to lead customers to the DVD-by-mail business, has turned into an annoyance.
If Netflix wishes to reorganize itself internally, so be it. However, there’s no reason why Netflix can’t provide a single easy-to-use interface to its customers. Unless, of course, Netflix wants out of the DVD business.