Netflix Cracks Up and Introduces Qwikster

Will Reed Hastings' damage control do more harm than good?

By , Columnist

Back in July, Netflix announced they would be splitting up their streaming and DVD rental plans. If you wanted to keep one or the other, you’d end up saving money. But if you, like so many others, had come to enjoy both options, your monthly subscription would be increasing. A lot. A whole lot.

The idea was presumably to force you to choose which option you preferred. Netflix has made no secret of the fact that they want you to go with streaming. It’s a far more profitable business model compared to mailing discs in little red envelopes to you once or twice a week.

But hey…surprise! Turns out that a lot of folks decided to opt for neither. Subscribers have been abandoning Netflix in droves over the past few weeks. So co-founder and CEO Reed Hastings did the only reasonable thing he could do late Sunday night. He offered up a mea culpa on the Netflix blog.

Hastings admitted yes, the rate increase was far too dramatic, which was my chief complaint when I first reported on the story back in July. Netflix grew too far, too fast, and maybe we’re victims of our own success. We should have explained all this better. Woulda, coulda, shoulda.

Here’s where things get weird. Instead of offering a discount to longtime subscribers or trying to find any real solution, it appears that Netflix will be splitting up. The streaming service will still be referred to as Netflix. But that prehistoric, getting physical-discs-in-that-thing-humans-once-called-a-mailbox deal is now a whole new service. It’s called Qwikster. Because (A) it’s so darn fast and (B) Quik is a delicious chocolate powder that, once added to milk, makes for a drink no one can resist. 

The good news is that Qwikster will now offer video game rentals to their service. Yay! This would have done me a lot of good about 20 years ago when I still played video games. But from a non-selfish viewpoint, it really is a good move that’s a long time coming. Netflix was surpassed in this area a long time ago and it’s probably too late for them to catch up.

Here’s the bad news and it’s a doozy. Netflix and Qwikster will be separate sites. So managing your queue just got a whole lot harder. Want to watch Iron Man 2 on Blu-ray? Go to Qwikster. Want to watch Iron Man 2 right now on your streaming dealey-bob? Go to Netflix. Want to watch Iron Man 2 but don’t really care how you manage it? Good luck.

After July’s rate increase news, we saw Netflix accidentally shoot themselves in the foot. After this new information, we watched them take the gun back out of the holster and intentionally shoot the other foot. It may or may not be the death throes of Netflix. Here’s why:

  1. This has been in the works for some time. No one gives up a brand name like Netflix if they can avoid it. My guess is that the company sold off the DVD rental branch of the business and was forced into rebranding it. Honestly, you have an instantly recognizable name like Netflix and you’re just going to throw it away for something as idiotic as Qwikster? Because that sounds so much better and everybody is going to be pleased as punch to get red Qwikster envelopes in the mail. Please.
  2. You probably heard about the Netflix/Starz deal falling out recently. This cost the company rights to stream recent movies from companies like Disney and Sony. They just lost a lot of content. So if they’re going to make an announcement like this, they have something else cooking in the wings. Something we don’t know about. Expect a major announcement soon that gives Netflix rights to stream a major vein of content.
  3. On the other hand, what’s in a name? Actually, quite a lot. Netflix inspired confidence for over a decade. It was convenient, innovative, and had a much deeper catalog than most local video stores. Redbox is fine if all you want is new stuff. But one of the unexpected benefits of this situation may be the rebirth of the independent video store. Already, Netflix and Redbox have restrictions that prevent them from offering new movies for several weeks. Independent stores don’t. In Seattle, go to Scarecrow Video. In Los Angeles, go to Cinefile or Videotheque in South Pasadena. In Austin, go to I Luv Video. If you truly love film, you have options. Seek them out and use them.

No matter what you think of all this, Netflix is absolutely correct about one thing. Physical media will eventually not be a part of the movie rental business. Streaming and downloads will take over that part of the equation.

However, I believe they’re making a mistake by forcing that transition too quickly. Picture and sound quality has improved since Netflix started streaming but it’s still remarkably inconsistent. Watching a Netflix Instant movie is sort of like going to a theater where the projector gets knocked out of focus every few minutes.

The genius of Netflix was introducing streaming as a compliment to their DVD rental service. They were crack dealers giving us our first hit for free. When the plans were severed and rates went up, I was disappointed but not surprised. The all-in-one model was too good to last forever, especially as more customers became hooked on streaming.

But even at the higher price, I could justify continuing both services because they complimented each other. DVD and Blu-ray rentals were my preferred option but if they weren’t available or I was impatient, I’d go with streaming. The new Netflix/Qwikster arrangement makes that extremely difficult if not outright impossible.

On the one hand, it’s admirable that Reed Hastings recognized the need for damage control after the poor way Netflix handled the rate increase situation. As he said in his blog posting, “I messed up.” Indeed you did, sir. Apology accepted.

But this peculiar “solution” just messes things up even more. Without integration between Netflix and Qwikster, there seems to be little point in sticking with both. Hastings didn’t build Netflix into the success story it is by making stupid decisions. I have to assume he knew that this would not go over well. If he has an ace up his sleeve, I hope he plays it soon. Otherwise, we may be seeing the beginning of the end for Netflix.

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Adam Jahnke has been writing about film since age 13, when he began foisting a self-published newsletter on friends and family (copies of which are now mercifully lost to the ages). In 2000, he joined the staff of the highly respected DVD website The Digital Bits, where he continues to serve as columnist…

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