Netflix Kills Qwikster Before It Has A Chance To Live

from the one-step-forward-two-steps-back dept

Mon, Oct 10th 2011 1:48pm — Zachary Knight

In a not all together surprising move, Netflix announced its plans to kill Qwikster. It cites a backlash from consumers over the plan to separate the DVD and streaming services into two brands with separate websites. The whole raking over the coals it got from the media probably didn't help its plans, either. So before it even had a chance to live, Qwikster is dead. However (not surprisingly), Netflix plans to retain its current pricing model.

What this development really reeks of is a strong disconnect between Netflix and its customers. These are moves of a company focused on how to best benefit itself, not how to best benefit its customers. Based on the overall reaction to the price change and the service split, it looks like Netflix never took into account what its customers would think or how they would react to the change. Instead, it focused on its own situation first, and then retroactively tried to spin it in terms of how it might benefit consumers. Had it taken the time to objectively think about and plan for customer reaction rather than looking out for its own interests, it could have prevented all this bad publicity and retained many of the customers it lost. Hopefully, Netflix will take this folly as a learning opportunity and make positive changes to its business philosophy and customer relations.

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Filed Under: consumer focus, names
Companies: netflix, qwikster

20 Comments

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:Lobo Santo (profile), 10 Oct 2011 @ 1:55pm

Not Likely
Netflix has almost no mechanisms for customer feedback--esepecially not (heaven forbid!) things like Suggestions.

As a result, it's pretty natural they'd be completely out of touch with their user-base.
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- Any Mouse (profile), 10 Oct 2011 @ 10:56pm
  
  Re: Not Likely
  Yes. The closest they have is the comments on their blog. Maybe if they read them from time to time...
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FarSide (profile), 10 Oct 2011 @ 1:58pm

buyout fall-through?
A business guy who is way more involved with these things said it "seemed almost certain" from the turn of events that the only reason Netflix would have for splitting it's business in half was to sell it - specifically to Amazon.

Due to some bumbling, stock price fell to half and the buyer backed out.

Whether true or not, it's an interesting explanation, to be sure.

Regardless, they have a crap-load of competition on the horizon, so they better figure out something fast.
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sehlat (profile), 10 Oct 2011 @ 2:03pm

Ask MBAs to think of *customers*?
What HAVE you been smoking?
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Planespotter (profile), 10 Oct 2011 @ 2:28pm

How the mighty fall from grace... and fall fast.
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JIM (profile), 10 Oct 2011 @ 2:35pm

I love netflix
and I think they see their own future better than we can guess. They want out of the DVD market because it is such a low margin business. They know that competition is on the way and the format itself is going the way of vinyl, and CD's.
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- :Lobo Santo (profile), 10 Oct 2011 @ 2:44pm
  
  Re: I love netflix
  Kinda like vinyl & CDs are still around and people like to have them even though they could totally just download the music for next to no cost anyhow?
  
  I agree.
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- hothmonster, 10 Oct 2011 @ 2:59pm
  
  Re: I love netflix
  I thought, with no references to back this, that the plan was to separate the revenue of their mail and streaming businesses to keep Hollywood from raping their DVD profits along with their streaming profits. As in you can't touch any quickster money because its all first-sale...so we don't have to show you those profits when we negotiate our streaming licenses
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  - John Doe, 10 Oct 2011 @ 3:53pm
    
    Re: Re: I love netflix
    That is exactly what I was thinking. But I think customer backlash put a stop to it.
    
    I don't blame Netflix for trying and it is especially big of them to admit a mistake and correct it. Very few corporations do that.
    
    What is happening here is the movie studios are trying to kill them off, Netflix is trying to survive, but will most likely die. Much like the water buffalo in the middle of a pack of hyenas. You are cheering for the buffalo but you know it is hopeless.
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    - mikey4001, 11 Oct 2011 @ 11:15am
      
      Re: Re: Re: I love netflix
      Interestingly enough, there is a blatantly obvious lesson for the studios to learn from all of this. The studios think that their content is worth significantly more than Netflix was charging. They forced Netflix to raise their prices. Netflix has lost a metric shit-ton of customers (read: money) because of this. The studios have now learned that their content was indeed NOT worth significantly more than Netflix was charging.
      
      Now then, who wants to wager that the major motion picture studios will actually take this lesson to heart and change the way they think about consumers and technology? Anyone? Nobody?
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- Aerilus, 10 Oct 2011 @ 9:19pm
  
  Re: I love netflix
  Dvds are something they have control over they can actually buy them and distribute them without the permission of the entertainment business if they go strictly streaming without producing their own content them they are laying themselves at the mercy of the entertainment industry who has a long history of killing golden gooses to cut the eggs out of them melt them down and pawn them to keep their pockets lined. netflix needs a revenue stream that can't be tampered with in order to stay alive in the long term either keep distributing physical media or create their own media and step up to the big boys table.
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Glen, 10 Oct 2011 @ 3:06pm

Oh well...
I cancelled my membership because I didn't want to mess with all the hassle but honestly I haven't really missed it. I go through Amazon or *ahem* some other way.
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Anonymous Coward, 10 Oct 2011 @ 3:18pm

All I can say is, if I were behind it, the whole mess would have been orchestrated to at least crucify the managers responsible at the content providers for the revenue stream Netflix currently provides them. "Look at this -ing mess now! You had to get greedy and stupid and insist on more than your customer could afford!"
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Anonymous Coward, 10 Oct 2011 @ 3:57pm

Does Hastings have his golden parachute ready?
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partially anonymous, 10 Oct 2011 @ 4:07pm

DISH/Blockbuster service rollout and stock-price dive influenced this decision more than any consideration of customers.
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Will Best, 10 Oct 2011 @ 4:31pm

The split and the price change were always logical to me. The pricing scheme needed to be separate due to first sale v. streaming doctrines.

The reason to not be in the DVD business isn't necessarily that the margins are bad, but because you start getting yourself into physical presence issues where state long-arm statutes can try reaching you.

The Amazon rumor actually makes a lot of sense in that context because it is ruthless in its quest to avoid being an unpaid tax collector.
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- Anonymous Coward, 10 Oct 2011 @ 4:37pm
  
  Re:
  agreed. Personally my read was that they were under heavy pressure from Starz and other content providers to do something suicidal...so they made a stab at splitting the services, earlier than the market was ready for, because it was the only option they had.
  
  But then the consumers blamed them for everything, and ran away in droves, until they just said "screw these interwebz trolls". all memberships now go directly into numbered accounts in the tortugas, at some point soon netflix exec's will begin taking extended vacations, while leaving us to rot with that bullsh** Hulu turned into.
  
  Then we all get vpn accounts and go back to the yarrrrr
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James Driskell, 10 Oct 2011 @ 4:57pm

Like how did I know this was going to happen???
I'm not the most business oriented person in the world, but I saw this one coming right after I got the last apology letter from Netflix. Apology accepted. Now I gotta go sign up for Amazon Prime. Yeehaaa!
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mrtraver (profile), 10 Oct 2011 @ 8:49pm

Right department?
Wasn't this actually from the "two-steps-back-one-step-forward" dept.?
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Anonymously Brave, 11 Oct 2011 @ 9:43am

1) Amazon would never buy the DVD arm of Netflix. What makes Netflix work so efficiently is they have shipping centers everywhere. If Amazon bought them out, they would instantly be on the hook for collecting sales tax from virtually every state -- something they have been stubbornly avoiding.

2) I agree what the split was likely to make it easier to negotiate streaming rights using only streaming revenue (and non-disclosure of DVD revenue.) However, even though the split is no longer happening, Netflix is still charging independent fees for DVDs and streaming. Regardless of whether they show up as a single charge on the customers' accounts, it would seem that they could be separately by Netflix's accounting department. Problem solved.

3) Even though streaming may be the "way of the future" most people still use discs in the "here and now." Pushing people into streaming-only right now is basically asking everyone to be satisfied with TV shows (most of which can be streamed elsewhere for free) and older movies from 10+ years ago -- very little new material. Once again, these are consumers who are accustomed to getting new release movies and shows on disc.
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