Netflix calls off Qwikster plans, DVDs staying at Netflix.com

By on October 10, 2011, 10:37 AM

Less than a month since making the official announcement, Netflix is calling off plans to divide its streaming and DVD-by-mail services into two separate entities, its co-founder and CEO Reed Hastings revealed today in an emailed statement.

The latter was to be called Qwikster and would offer its services through a separate website while the streaming business maintained the Netflix brand. Besides the confusion generated, a previous price change raised the cost for those who want both services by 60%, causing an outrage among customers that ultimately cost the company about 1 million of its subscribers.

The price change is still in effect, only they are now going to keep Netflix.com as the one place to go for streaming and DVDs. That means subscribers who want both services won’t have to manage two accounts and pay two bills each month, after all.

"Consumers value the simplicity Netflix has always offered and we respect that," said Reed Hastings in a statement. "There is a difference between moving quickly -- which Netflix has done very well for years -- and moving too fast, which is what we did in this case." Defending the July price increase as necessary, Hastings went on to say that the company has vastly expanded its library of available content with hundreds of movies and thousands of TV episodes.

Netflix shares rose as much as 10% in early trading -- their stock had tumbled 62% from its high in July before today.




User Comments: 8

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Vrmithrax Vrmithrax, TechSpot Paladin, said:

Well, at least they are a company that listens to the outrage and adjusts their policies accordingly. I can think of more than a few companies out there today who just blunder through whatever they want to do and ignore valid complaints from their consumers...

SNGX1275 SNGX1275, TS Forces Special, said:

This is like a soap opera.

Back when they were going to be essentially 2 companies, I figured it might be good because if they aren't revenue sharing, the online portion may be pushed to increase content more. But now that they are the same again, I wonder if the online portion will ride the profits of the mail order a while longer without the same drive to increase content. Of course I think eventually the mail order will cease to be profitable, probably in large part due to shipping costs.

jetkami said:

The CEO gets paid millions cuz he can make these hard decisions. Capitalism is so messed up.

MilwaukeeMike said:

jetkami said:

The CEO gets paid millions cuz he can make these hard decisions. Capitalism is so messed up.

Did you know that Reed Hastings is in favor of raising tax rates on anyone making over a million dollars a year? He says... "Some will tell you that would reduce the incentive to earn but I don't see that as likely. Besides, half of a giant compensation package is still pretty huge, and most of our motivation is the sheer challenge of the job anyway."

In general CEO's earnings are tied to stock price, so it's in their best interest not to mess up. Most people think it's not messed up to be rewarded for doing well. It's far better than getting paid the same even if you screw up. You know... like our politicians.

Vrmithrax Vrmithrax, TechSpot Paladin, said:

SNGX1275 said:

This is like a soap opera.

Back when they were going to be essentially 2 companies, I figured it might be good because if they aren't revenue sharing, the online portion may be pushed to increase content more. But now that they are the same again, I wonder if the online portion will ride the profits of the mail order a while longer without the same drive to increase content. Of course I think eventually the mail order will cease to be profitable, probably in large part due to shipping costs.

From what I've gathered on the subject, the 2 formats will still operate as separate entities within Netflix as a whole, with separate budgets and costs. It was going to be easier for the Netflix as a company to split off as 2 distinct identities, but more difficult for the consumers. Looks like they decided to take on the complications and remain under a single umbrella to simplify the end-user experience instead.

jetkami said:

I have worked with CEOs from Pepsi, IBM, Ford, and Detroit Chassis. My Ex girlfriend was just under the CEOs at Kmart when they went bankrupt (no she is not a Secretary). Behind the closed doors they admit are in it to get what they can and when it gets bad get out. As far as stock...dude you can borrow on that ANYTIME you want. This is why they all become super rich so quick. I knew a guy at Pepsi who became a multi-millionaire within 8 months of getting his job. Before that he was just a production manager blowing wind up the butts of teamster union members. Today the union members are trying to keep the company from cutting their pay...FAIL..., but Mr.Pepsi is much richer today then he was then.

SNGX1275 SNGX1275, TS Forces Special, said:

I have worked with CEOs from Pepsi, IBM, Ford, and Detroit Chassis. My Ex girlfriend was just under the CEOs at Kmart when they went bankrupt (no she is not a Secretary)....

So you are saying she was their mistress...

pixRx3r said:

Were they responding to their customers or the declining trends of their stocks after the Qwickster introduction? Netflix made several mistakes to cause not only their subscribers but also any potential subscribers to not trust Netflix as a company. As an employee and subscriber of DISH Network I have access to the entire Blockbuster collection of DVD?s, Blu-ray and video game rentals by-mail and in-store with the Blockbuster Movie Pass plus streaming, and it?s only costing me $10 a month.

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