Netflix Spins off DVD-by-Mail Service into Qwikster; Will Add Video Game Rentals

     September 18, 2011

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Netflix has faced a revolt ever since splitting its DVD-by-Mail Serve and Video Streaming Service into two separate price plans.  I argued at the time that this split was necessary to keep the company competitive and that people were free to leave if they felt priced out of the service.  Now I feel like I’m being punished for sticking around.

On the official Netflix blog, co-founder and CEO Reed Hastings apologized for the way the announcement of the new pricing-plan was made, and further tried to explain why Netflix had adopted the new pricing scheme. He then revealed that the company will spinning off its DVD-by-Mail service onto a new site, Qwikster.com.  Hit the jump for more details and why this new development won’t win anyone back and only irk those who stayed.

Here’s an explanation video that shows that Netflix couldn’t afford something more professional to announce their new service.

If you don’t want to watch Hastings drone on or you don’t care what the new envelope and Qwikster logo looks like, here’s an explanation of the service from the Netflix blog:

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, and now that DVD by mail has its own team, we are finally getting it done.  Other improvements will follow.

netflix-envelopes-mailedSo it’s re-branding, except not really since Netflix will keep its name for the streaming business.  It’s basically an acknowledgement that the DVD-by-Mail business will eventually die and when it does, Netflix wants to keep its name with the most-likely-still-alive streaming business.  However, getting to rent video games is pretty nice, right?  That way you can drop your Gamefly account and keep everything under the Netflix roof.

Except you can’t.  Netflix’s roof only covers streaming titles now.  Qwikster gets its own roof and the pointless division will provide a needless headache.  Here’s how it will work:

Another advantage of separate websites is simplicity for our members. Each website will be focused on just one thing (DVDs or streaming) and will be even easier to use. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated. So if you subscribe to both services, and if you need to change your credit card or email address, you would need to do it in two places. Similarly, if you rate or review a movie on Qwikster, it doesn’t show up on Netflix, and vice-versa.

It’s ironic that in trying to apologize to customers for trying to sell the new pricing scheme as a something wonderful, Netflix is once again trying to spin a negative into a positive.  I didn’t have trouble keeping track of my DVDs on Netflix.com.  Plus, Netflix knew when a DVD was now available via streaming and automatically added the title.  That’s gone now.  The integration has been removed and then we’re told that everything is simple because we have to deal with two websites instead of one.

This has been a bad past few months for Netflix.  I didn’t mind the new pricing scheme, but losing the Starz negotiation was an embarrassment for the company and a troubling sign that more licenses may expire without any hope of renewal.  Now they’re making matters more difficult for those who stayed on board with a plan that won’t win anyone back.  Customers didn’t leave Netflix en masse because they had an issue with the name or that they couldn’t queue their DVDs on a completely different site.  They left because the price was too high and there’s really no solution for that.  Adding video games is a smart move because you can siphon off Gamefly customers, but the other changes are baffling to say the least.

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