Is Netflix trying to kill itself? Short answer: yes. Long answer: yeeeeeeeeeeeeessssssssss.
The general consensus has for too long now been that Netflix is too eager to get out of the very rent-by-mail industry it both revolutionized and dominated, hoping, one supposes, to get out before the profitability plateau becomes a downhill slope, moving into the future (and we must admit, Netflix has – or had, anyway – a reputation as a smart forward-thinking company) by focusing on streaming video. The signs had been clear: they fought for better deals for streaming while rolling over to studio demands on DVD availability. They redesigned their site to emphasize streaming, giving second-class status to physical discs. They seemed to revel in the idea of “it’s on Netflix” becoming shorthand for “it’s available via Netflix’s streaming video service” (while not caring if people said “it’s not on Netflix” just because they didn’t offer it as a streaming title, even if it was available for rent).
Then, of course, came the announcement of price hikes and the separation of DVD and streaming plans. It became a PR nightmare, and since the company used to be so well-known for its solid customer service and PR expertise, I wonder if, for some unknown reason, they allowed for the disaster, perhaps wanted it. After all, it wouldn’t have been difficult for the company to get command of the story and spin the change to their advantage, perhaps stressing that for most customers, the ones who prefer DVD rental or streaming but not both, their prices actually dropped. Instead, the single narrative, still repeated today, is that they raised their prices as much as 60%, which led to a customer revolt, which led to a sizable dip in stock value.
And now we know why Netflix didn’t seem to be worried too much. This morning, Netflix customers received a rambling email signed by CEO Reed Hastings (you can read a copy here, or, for more cringeworthy insanity, watch Hastings offer the ramble via video here) which clumsily attempted to explain the changes in service plans, peppered with what plays like faux-friendly apology. And then he tells us Netflix will, starting in “a few weeks” (the announcement is ridiculously vague regarding a timeline), become a streaming-only website; its rent-by-mail service, formerly so well loved, will now become “Qwikster” (but don’t worry, we’re assured the envelopes will still be red!); the two services will now be separate entities with separate websites, separate queues to maintain, and separate charges to your credit card.
The reaction was immediate and disastrous, ranging from “this is stupid” to “this is very stupid” to “I loathe this very stupid thing.” The internet was quick to point out the inconveniences inherent with separating the services, not to mention the high annoyance factor of the word “Qwikster” – as if they’re intentionally making it appear to be a less desirable service.
Curiously, nobody at Netflix bothered to check the name; it was quickly discovered that a Twitter user has already laid claim to the “Qwikster” handle. Since Netflix has made such good use of Twitter as a marketing tool, surely somebody there would expect users to check @qwikster, and surely somebody there knew those same users would find not NeoNetflix but a pothead with questionable grammar skills. They have two options: ignore the account and attempt to steer everyone to some other handle, or attempt to buy the handle from the pothead. If it’s the latter, that’s one more example of the company having to unnecessarily pay due to bad planning; if it’s the former, it suggests Netflix is intentionally hoping to weaken the Qwikster brand before it even gets going.
The upside to all of this? Separate revenue means Netflix is now free to bargain with studios for better deals on streaming without having to make DVD availability a factor. They’ll have more room (and, it seems, more money) to fight for more titles, all without dealing with any aspect of rent-by-mail – which is precisely what Hastings has wanted for a long time. And if Qwikster sinks? Not his problem, because Netflix will still be alive.