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BITEYOASS
09-19-2011, 07:07 PM
Netflix splits DVD and streaming services
By Lisa Richwine and Yinka Adegoke | Reuters – 26 mins ago...

LOS ANGELES (Reuters) - Top video rental company Netflix Inc split off its DVD service to a separate website called Qwikster, setting off another round of complaints from customers already angry at a price increase and sending its shares down 7 percent.

Negative comments piled up on the company website on Monday, a little more than two months after Netflix raised prices for DVD services. Chief Executive Reed Hastings admitted to "arrogance" over failing to adequately explain the changes in an apology that rang hollow to many customers.

Hastings, in a blog post late on Sunday, said Netflix was changing the name of its DVD-by-mail business to Qwikster, the brand that will appear on the company's signature red envelopes, and also offer video games. It will reside separately from the Netflix website, where instant streaming of television shows and movies will be offered.

Netflix shares dropped 7.4 percent to end at $143.75 on Nasdaq.

The announcement could cause more cancellations of monthly Netflix subscriptions, some industry analysts said. The news came a week after the company said it was adding fewer subscribers than forecast because of a price increase as high as 60 percent, or $6 a month, for joint streaming and DVD rental service.

The pricing uproar and the collapse of talks with movie-content provider Starz have driven Netflix shares down nearly 50 percent since it unveiled the price increase on July 12.

Some industry analysts said the company risked losing more subscribers as the Qwikster and Netflix websites would not integrate customer use or preferences data for streaming and DVDs, making it more difficult to use both services and possibly creating confusion.

"I think Qwikster will quickly be known as Quit-ster," said Wedbush Securities analyst Michael Pachter, who has a "sell" rating on Netflix shares and a $110 price target.

The new name also lacks the recognition of the well-known Netflix brand.

Other analysts said the negative customer response to the higher pricing for DVD services remained a major challenge, not the new name or separation of the units.

"There's still a lot of backlash from the price increase before. At this point, consumers are still looking for a less expensive" alternative such as Coinstar Inc's Redbox kiosk, said Merriman Capital analyst Eric Wold, who rates Netflix shares "neutral" and has a "buy" rating on Coinstar.

Netflix may be preparing to eventually sell the DVD business, some analysts said. Hastings has stressed the company sees its future in streaming as customers increasingly turn to a variety of Internet-connected devices for entertainment.

Many Wall Street analysts have applauded the moves to push customers toward the higher-margin streaming business as a smart long-term strategy and said the price hike was needed to pay for increasingly costly content.

Hastings, seen as a visionary who changed the way people watch movies and television, said he was separating the units because they were evolving as very different businesses that needed different marketing. "We need to let each grow and operate independently," he said.

Customers flooded the company's website with thousands of blog comments on Monday, many upset or confused by the splitting of streaming and DVD businesses.

"This makes little sense to me. It will now require more work," one commenter wrote, adding "sadly, this might be the last straw."

Another said she thought Netflix remained a "great bargain," adding "I love having both DVD delivery and streaming!"

Hastings, in his blog post, said he had not adequately explained his reasons for splitting the operations and raising prices for the DVD options when the plan was unveiled in July.

"I messed up," Hastings wrote. "In hindsight, I slid into arrogance based upon past success."

Hastings said there will be no pricing changes, and subscribers to both services will have two entries on their credit card statements, one for Qwikster and one for Netflix.

Netflix has been under pressure from Hollywood studios and cable programmers to pay much more for content. Analysts have said it would start to lose more shows for its streaming service after failing to reach a new agreement with Liberty Media's Starz.

But Hastings said new content would be coming soon.

"The additional streaming content we have coming in the next few months is substantial, and we are always working to improve our service further," he said.

Even as it seeks out more content for its streaming service, Netflix faces increasing Web video competition from the likes of Amazon.com, Google Inc and Apple Inc.

Blockbuster, the once-dominant video store chain now owned by Dish Network, is expected to announce plans for a new streaming service on Friday.

Netflix remains the industry heavyweight with 22 million streaming subscribers.

Unlike Netflix's current DVD plan, Qwikster will feature a videogame upgrade for customers who want to rent Wii, Playstation 3 and XBox 360 software.

"Members have been asking for video games for many years," Hastings said, "and now that DVD by mail has its own team, we are finally getting it done."

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All right Netflix if that's how you want to be then FUCK YOU!

Terry
09-19-2011, 09:31 PM
Can't say as it's a huge shock. The company has made no secret that the ultimate goal is to eventually get out of the business of handling dvds and liquidating their tangible inventory. As a longtime customer, I began to notice once the streaming aspect was introduced that their more obscure and rare titles began slowly vanishing from the dvd rental availability, followed by a gradual lack of maintenance regarding more standard titles that SHOULD be available for a service that boasts having 70,000 flicks to choose from.
What became a bit of a letdown was seeing the condition of their dvds sent to me, in terms of discs being clearly cracked, severely scratched or broken. This became more frequent as the streaming aspects were placed front and center, and is a poor display of quality control. In addition, as a customer I have to find out about the service changes along with everyone else. The basic message is if you don't want to upgrade to streaming, you're free to either take what you can get from Netflix or fuck off. Sadly, there aren't any local rental stores to be found anywhere anymore.
It was a good ride while it lasted.

fryingdutchman
09-20-2011, 06:37 AM
I've been a member of Netflix for a few years now...but I am a very "casual" user. I didn't even know about all of the hubbub until I got this letter in my e-mail from Hastings within the last couple of days...


Dear -----,

I messed up. I owe you an explanation.

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.

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). So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.

So here is what we are doing and why.

Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD. DVD is a great option for those who want the huge and comprehensive selection of movies.

I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We need to focus on rapid improvement as streaming technology and the market evolves, without maintaining compatibility with our DVD by mail service.

So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.

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.

There are no pricing changes (we’re done with that!). If you subscribe to both services you will have two entries on your credit card statement, one for Qwikster and one for Netflix. The total will be the same as your current charges. We will let you know in a few weeks when the Qwikster.com website is up and ready.

For me the Netflix red envelope has always been a source of joy. The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you.

I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly.

Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.

Respectfully yours,

-Reed Hastings, Co-Founder and CEO, Netflix

p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments

Nitro Express
09-20-2011, 10:58 AM
I never used the DVD service. My wife does and she was pissed. If it's a movie I really want I buy it. Netfilx is where I go to just to throw something on to watch. My youngest daughter discovered the Munsters and watches that now. I was in a Hawaii-Five-O mood so watched that last night. Man. They had some good who done it's on that show.

twonabomber
09-20-2011, 11:53 AM
i'm using Netflix like i use Redbox.

rent...rip to hard drive..return.

almost through my queue.