September 19, 2011 by Paul Curtin
Recently Netflix split their DVD-by-mail and movie streaming service into two individual fees, a move that upset many fans of the popular service and has been reported to cost Netflix millions of subscribers over the next few months. To try and fix things, Netflix’s co-Founder and CEO, Reed Hastings, has taken to the official Netflix blog to explain their decisions, admit he was wrong, and announce an even bigger split.
Hasting, who admits “I messed up. I owe everyone an explanation,” has just announced that Netflix’s DVD-by-mail service will officially become Qwikster, the same exact service but with a new name to create less confusion and the ability to also rent video games. While Qwikster will focus on hard copies of movies and games by mail, Netflix will still exist as the main company that will handle all streaming services. Here are some quotes from Hastings via the official Netflix blog:
For the past five years, my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.
So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: 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, and now that DVD by mail has its own team, we are finally getting it done.
