Mac Musings

The Beginning of the End for Netflix

Daniel Knight - 2011.09.20 -

Netflix is spinning off its DVD-by-mail service so it can focus exclusively on its streaming video service. What kind of a moronic move is that?!?

My wife and I love Netflix, and I was thrilled when Netflix added a streaming app for Wii. No more waiting for DVDs to arrive in the mail - or not, as about 95% of what Netflix had on DVD wasn't available as streaming content back then.

Things have improved significantly since then, but there is still a lot of DVD material that Netflix doesn't stream. For instance, Roots and The Wild, Wild West TV series only come on disc.

It was bad enough when Netflix decided to nearly double rates for those who want both discs and streaming content, going from $9.99 (it was $8.99 a year ago) per month to $15.98. But because of the amount of material not available via streaming, and because I'm hooked on streaming content, we bit the bullet. $16 a month isn't an unreasonable entertainment budget.

But then Netflix announced Qwikster, a new name for the service that gave Netflix its start. According to the announcement, Qwikster will have a completely separate website, separate billing, and separate queues. And that means Netflix users will have to manually enter dozens or even hundreds of disc-only titles to the new service.

C'mon, guys, give us a break. Use those powerful computers to do something more than just stream video and track your users. At the very least, automatically transfer our disc queues from Netflix to Qwikster.

The Beginning of the End for Netflix?

Netflix decimated Blockbuster with its DVD service, and adding streaming video was a brilliant move, especially when there was no additional cost for the service.

However, success went to someone's head, and they really didn't think through the new business model.

With the old model, discs and streaming content came from the same source. You could check your disc queue, discover that this movie or that TV show was now available as streaming content, watch it that way, and remove the disc from your queue.

With Qwikster, you're not going to be able to do that. Here's the convoluted new process:

1. Check you Qwikster queue for movies you're interested in.
2. Pop over to Netflix to see if they are available as streaming movies. You'll have to do this one movie at a time.
3. Go back to Qwikster so you can remove streaming movies from your queue.

No more unified queue. If the extra cost of DVD service didn't turn off enough Netflix users, the extra hassle of coordinating two separate services is very likely to do it. I know we're not at all happy about the prospect of having to enter our queue all over again.

Netflix was a raging success, just as AOL was once upon a time. And just as AOL thought it could do no wrong, so does Netflix today.

Investors certainly think so, as Netflix stock lost a year's worth of gains since announcing it would spin of Qwikster two days ago. (Netflix hit a high of $298.73 per share before announcing its new pricing model, was just under $170 late last week, and after Sunday's announcement, it has dropped to $130.)

Separating two services that overlap as much as this won't do Netflix any good, although it does provide a real opportunity for competing disc-by-mail and streaming video services to scoop up a lot of disgruntled Netflix users.

Other than humbly admitting it made a stupid move and canceling plans to spin off Qwikster as a separate company, Netflix is in for a world of hurt.