Qwikster

ardichokeardichoke Icrontian
edited September 2011 in Internet & Media
So, the changes in the price structure by Netflix have been explained today. Apparently they're spinning the DVD-by-mail portion of their business off into a new brand and site, qwikster.com. This leads me to ask one thing. Are they TRYING to kill their DVD-by-mail service? They're taking a well known, household brand and breaking the service that made them relevant in the first place off into a new, unknown name. Not only that, but they're splitting everyone's queue in two. The streaming/DVD dynamic worked extremely well together in my opinion, now they're making things twice as complicated. Is it just me, or does this seem like a huge mistake to anyone else?

Also, apparently they're adding video games to the DVD by mail service. That much I think is a good idea.

Comments

  • AlexDeGruvenAlexDeGruven Wut? Meechigan Icrontian
    edited September 2011
    As I stated on your G+ posting:

    They're moving the DVD-by-mail business into its own space to use it to raise money to increase their buying power for future digital delivery. They want out of the mail business, but the only way they'll be able to do it is to be able to provide release-day (or pre-release exclusives) digital delivery. The only way they'll be able to do that is with fat wads of cash placed in the appropriate palms/pockets.
  • Cliff_ForsterCliff_Forster Icrontian
    edited September 2011
    Old guy "get off my lawn" rant coming in 3..2..1..

    What an amazing age we all live in. For a fee approximate to what most working class folks make in one hour we can enjoy an entire month of unlimited streaming digital video with DVD's mailed to our homes as well for unlimited selection. An all you can watch smorgasbord for one hours pay every month, and yet, the modern consumer is displeased.

    Everything is amazing & nobody is happy. (my favorite Icrontic Life piece) I think it is fair to say that technology has produced a generation of spoiled brats with an entitlement complex.

    I remember going to my local Drug City video store with my Dad. After dodging the sleaze balls coming out of the adults only section, Dad would be able to reasonably afford to allow us to pick out one VHS and or one NES game every couple of weeks. Typically that would be about $9, and you have drive there to return it in three days or double that. At the rate of inflation we were paying then what we pay now for an unlimited selection, much of it immediately available via streaming, and the rest delivered directly to our homes and yet, the modern consumer cries foul!

    All the high quality digital video you want, delivered directly to you, without late fee's for what most folks make in one hour. Icrontic, nobody is more pro consumer than me. Seriously people, I vote for Nader. If I can't make an anti corporate argument, there is not one to be had. Don't tell me it's about how they said it or went about it, that is a hollow arguement. I got both paper mail and email explaining the new structure and was given ample time to make any adjustments I saw fit as a consumer. Netflix did nothing but offer us all an amazing value. When it came time, consumers spat on Netflix for wanting to grow their business. Because if this, it will delay any chance we had of getting first day releases via streaming. Congratulations internet spoiled brats, you accomplished nothing but weakening a great product offering for all of us.
  • ThraxThrax 🐌 Austin, TX Icrontian
    edited September 2011
    I'm glad this decision was made. Netflix wants to get out of the disc service, and this is step one. So, yes, they are trying to kill DVD-by-mail. This has been reiterated several times by Hastings. Secondly, it gives the streaming arm more agility to go out and get deals: no overhead from mailing, smaller team of employees (cost reduction), no capital investment in discs, blah blah blah.

    I could write a top-20 why this is a good idea. But I'm lazy.

    Great move.
  • AnnesAnnes Tripped Up by Libidos and Hubris Alexandria, VA Icrontian
    edited September 2011
    We've been debating this in IRC. I'm pro-separation for the reasons Thrax has identified. In order to score some good streaming deals they're going to need a "big swinging dick" amount of money - getting rid of employees, mailings, and brick-and-mortar warehouses will help with this.
  • PirateNinjaPirateNinja Icrontian
    edited September 2011
    I also totally agree, this is the natural progression and fighting it would be silly.
  • TiberiusLazarusTiberiusLazarus Icrontian
    edited September 2011
    Things are CHANGING and i am MAD and i want to RANT about them on the internet WITH others.
  • AlexDeGruvenAlexDeGruven Wut? Meechigan Icrontian
    edited September 2011
    That's about what it boils down to.

    I understand Cliff's point: In general, we tend to bitch too much as a society.

    To defend some of the bitching, however. In most cases; it's not about the dollar amount, it's not about the splitting of the company, and it's not even about the future plans to kill off DVDs by mail. It's about the change itself. We, as humans, like things the way they are. Change is off-putting, upsetting, and creates in us a need to re-strike balance. This is amplified when we disagree with the changes (see my article about the Star Wars BluRay), making it that much harder to adjust (or in some cases, we're completely unable/unwilling to adjust).

    This will all shake out for the better for MOST people involved. Average home Internet speeds are climbing, cloud-centric models for our daily media consumption activities are becoming more viable and readily available, and the need for physical media will be drastically reduced (probably to the point of a backup-only strategy, which is where my personal usage is headed).
  • PirateNinjaPirateNinja Icrontian
    edited September 2011
    Tiiiiiiibbbbliznaznizinanznininnizzzznarious!
  • ardichokeardichoke Icrontian
    edited September 2011
    http://technolog.msnbc.msn.com/_news/2011/09/19/7838092-is-qwikster-quicksand-for-netflix This, by and large, covers how I feel about the announcement.

    I just think this is a stupid move. A large part of Netflix's success was thanks to the fact that they made things dead easy. If you wanted to see a movie, but it wasn't available for streaming (as is the case with the vast majority of titles) then you could add it to your DVD queue right there. Now they're completely tearing everything apart so you have to go to two different sites just to manage your queue. They're killing functionality and, essentially, asking the user to pay more for it.

    As for their "big swinging dick" to get more content, that's a joke. The cable companies have far more money than Netflix (even with this split) could ever hope to bring to the table. The cable companies will fight, tooth and nail, against being relegated to dumb pipe providers. The war between Netflix and Cable & Co. is going to be massive and is not going to end well for the consumer. Netflix would have been better off not making such an overt declaration of war as this one will be perceived to be. Especially since they have, at the same time, pissed off a large portion of their customer (as is evident by the flood of upset comments on the Netflix blog post).

    The price change alone resulted in Netflix losing over 1 million customers. How many more are going to go now that they've ripped apart their core functionality and forced anyone who uses both services to manage to completely separate queues? I never thought I'd see the day where Netflix did something so profoundly annoying that I'd cancel my service, but that day may well be here after all.
  • GnomeQueenGnomeQueen The Lulz Queen Mountain Dew Mouth Icrontian
    edited September 2011
    Meh. I do not care. Honestly, I didn't understand the huge amount of fuss everyone made about the price change a while back either, so when I got the "sorry, we screwed up big!" email I just thought, "No need to apologize to me." Meh.
  • JokkeJokke Bergen, Norway Icrontian
    edited September 2011
    You should be glad to even have a service like Netflix! Glad, I tell you! Think about the poor, struggling countries, where, to get a movie, you either have to pirate it or buy it from a store (either online or physically in a store). And that'll cost TWO full hours of pay for most people. For one movie.
  • kryystkryyst Ontario, Canada
    edited September 2011
    I live in Canada all we have from netflix is streaming. I don't even understand the appeal of the mail dvd option. It just sounds like a pain in the ass.
  • ardichokeardichoke Icrontian
    edited September 2011
    In IRC, people were asking about how many people use both streaming and by mail. This led me on a side quest to see if anyone had such numbers. So far, the only mention I've found is here:

    http://www.forbes.com/sites/ericsavitz/2011/09/19/netflix-street-wary-on-brand-split-snail-mail-is-qwik/
    Justin Patterson, Morgan Keegan: “Netflix is clearly moving away from DVD and this move puts the company one step closer to a streaming only future,” he writes. “The problem is 50% of subs use both services and the new inconvenience could spike churn yet again. Video games will require additional investment that is best spent elsewhere.”

    So, if this guys numbers are right, Netflix is gambling with half their customer base by making it significantly harder for them to continue to use the service the way they have been.
  • UPSLynxUPSLynx :KAPPA: Redwood City, CA Icrontian
    edited September 2011
    I've never used Netflix disc service anyways (I've only been a customer for 6 months LOLOLOLOL)

    And, regarding the actual blu-ray rental, the awesome Stu Maschwitz described the issue perfectly. Why bother when the parts that make Blu-ray great are stripped out?
  • MiracleManSMiracleManS Chambersburg, PA Icrontian
    edited September 2011
    We dumped streaming and went straight disc delivery. I don't have the time or money (see other threads where I've talked about PC builds, I'm still struggling to even think about putting a full PC together) to think about an HTPC and using a 360 requires a stupid XBox live subscription.

    Considering the streaming service didn't offer nearly enough to stay subscribed even if I did have the ability to stream (seriously here, the streaming selection is not very good at all) and we live under a 250gb cap from Comcast, we went the route of a DVD by mail every 2-3 days.
  • ardichokeardichoke Icrontian
    edited September 2011
    One of CNN's tech reporters also made some good points about why this is a very risky move for Netflix, aside from the whole "pissing off customers" angle.
    This is because copyright law applies very differently to Netflix's DVDs and streaming videos. With DVDs, Netflix can rent whatever it wants thanks to the First Sale Doctrine. Once Netflix owns a DVD, it has the rights to rent it to whomever it wants, at whatever price it wants to charge. Unfortunately, that's not the case with streaming video. There, the rights stay with the owner of the content, and those owners are charging more in licensing fees, and might be charging way more very soon. They also decide which videos can and cannot be streamed. DVD rentals, despite the relative inconvenience of rental by mail, might look like a bargain by comparison for many customers.

    Furthermore, Netflix until now had the option of giving customers access to DVDs if the company couldn't get streaming rights to a particular video. That gave media companies a further incentive to allow Netflix to stream their videos. That incentive is now mostly gone, because if Netflix can't get streaming rights, it will have to shunt customers off to a completely different company (albeit one wholly owned by Netflix) to get the DVD.
    http://tech.fortune.cnn.com/2011/09/19/netflix-plenty-of-pitfalls-in-the-fine-print/
  • CBCB Ƹ̵̡Ӝ̵̨̄Ʒ Der Millionendorf- Icrontian
    edited September 2011
    Furthermore, Netflix until now had the option of giving customers access to DVDs if the company couldn't get streaming rights to a particular video. That gave media companies a further incentive to allow Netflix to stream their videos.

    I don't think I get this part. Why is that an inscentive to let Netflix stream. I would think it would be the other way around: They're not worried about not letting netflix stream because they know that the customes can see it either way, where as now, they can't so for some customers, it's stream or nothing.

    I would think that the new system would encourage the rights holders to allow streaming.
  • ardichokeardichoke Icrontian
    edited September 2011
    I believe it would go something like this. Customers were on the Netflix site already, they're looking for said movie/TV show, Netflix can offer the DVD either way, but a lot of users are going for the instant gratification route. Since the production house has more say in the price of the streamed content, they have an incentive to cut a deal with Netflix to stream it which will provide them with more money since the customer is already there and will most likely grab the DVD if streaming is not available.

    EDIT, for clarification (maybe?): Now that they're splitting things up, they can no longer go to the studio and say "hey, we're renting out this movie on DVD anyway, why don't you make some extra cash by selling us streaming rights?" Or at least, that argument won't hold as much water since Qwikster will not be able to advertise the fact that streaming is available for the titles.
  • ThraxThrax 🐌 Austin, TX Icrontian
    edited September 2011
    and those owners are charging more in licensing fees, and might be charging way more very soon.

    Exactly why suffering under the capital costs of obtaining and mailing discs no longer makes sense.
  • ardichokeardichoke Icrontian
    edited September 2011
    Which would make sense, except for the fact that obtaining discs is essentially a fixed cost. They have to pay one time to obtain the disc and can rent it out as much as they want. The more they rent it out, the larger the profit. Yes, shipping discs costs money, but that's just a matter of figuring out "what's the max number of DVDs an account could rent in 1 month" then incorporating that cost in the price. Not to mention the fact that there's people like me who will sometimes get a DVD and forget about it for weeks (or months) at a time.

    On the streaming side, costs can go up arbitrarily any time the media companies want for any reason (or for no reason at all). Users can also stream content at a much higher rate which makes it harder to figure out the cost to pass on to the customer (in the case of per-stream fees). They're unilaterally disarming by splitting the two companies up. The DVD rental side was their trump card against the studios, as well as a way to subsidize the streaming side of their business to an extent. By spinning off, and likely selling or killing the DVD side, they're making themselves completely beholden to the content owners.
  • ThraxThrax 🐌 Austin, TX Icrontian
    edited September 2011
    ardichoke wrote:
    By spinning off, and likely selling or killing the DVD side, they're making themselves completely beholden to the content owners.

    The grim reality of our future with web-delivered media. Play by their rules, or don't play. I'm glad Netflix is trying.
  • Cliff_ForsterCliff_Forster Icrontian
    edited September 2011
    I think the issue Netflix is struggling with is knowing how much people will be willing to pay for a truly premium streaming selection.

    Netflix could find out what its going to cost tomorrow and ink long term deals with the studios, but the wild card is the consumers willingness to pay once they have had a next to free lunch for so long.
  • ardichokeardichoke Icrontian
    edited September 2011
  • fatcatfatcat Mizzou Icrontian
    edited September 2011
    Thrax wrote:
    smaller team of employees
    Annes wrote:
    getting rid of employees

    America needs more unemployed Americans, yes
  • ThraxThrax 🐌 Austin, TX Icrontian
    edited September 2011
    Erm, I doubt many employees are actually getting the boot. It's just that the DVD people are going with the DVD company, and the streaming people are going with the streaming company. In other words, more margin for their respective revenue streams.
  • fatcatfatcat Mizzou Icrontian
    edited September 2011
    you honestly think qwikster will survive?
  • ThraxThrax 🐌 Austin, TX Icrontian
    edited September 2011
    I think it's too soon to tell. What I do know is that the Internet has a history of overreacting, and then going right back to the hand that feeds. And if you want a hand that feeds well, Qwikster is the only game in town.
  • SonorousSonorous F@H Fanatic US Icrontian
    edited September 2011
    I see the point in the separation. I see the point in trying to move to an all streaming world. I just fear the world isn't ready for streaming only media. It's true that there are plenty or options when choosing devices that are now Netflix, Pandora and what ever other media source or social network enabled, but I feel like the numbers are not there yet to support such rapid and forced progression in to the next era of how we receive movies. I would hate to see Netflix shoot them selves in the foot by attempting to force the consumer into something.

    That being said I have to admit that I will continue to subscribe regardless. The major gripe I have is that I will now have to go to two separate sites to manage my queues. One of the major selling points for me was just the shear god damned convenience and soon it will be half gone. I'm not afraid of change, I just like it to come in due time when it is finally time to change.
  • MiracleManSMiracleManS Chambersburg, PA Icrontian
    edited September 2011
    fatcat wrote:
    you honestly think qwikster will survive?

    I think it will survive as long as Netflix continues its sparse selection at the current price and ISPs leverage stupid bandwidth caps. Until both of those things are changed I'll be sticking with Qwikster.
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