Like The Titanic, Netflix Splits In Two

Your home delivery of DVDs now comes courtesy of… Qwikster?

The headline here is misleading, at least when it comes to my feelings about Netflix. I like the company a lot, but can’t resist a good headline when it presents itself.

Lately people have been totally freaking out about Netflix raising their prices a fairly small amount; somehow unlimited streaming and movies delivered quickly to your door don’t add up to 25 bucks a month for those who complain. I guess they don’t remember the bad old days of video stores, when it was unlikely any movie you wanted was available and you had to pay 4 bucks to rent it… and nevermind the insane late fees. I know some folks have had problems with streaming quality; I can’t speak to that as I have found Netflix streaming HD (not the Starz movies!) to be impeccable. And again, I remember when I rented pan and scan VHS tapes - I don’t think I need perfect fidelity when watching The Capture of Bigfoot.

Netflix has been attempting to reposition itself, seeing streaming as the future of home video, and the price increase was all a part of that readjustment. Now comes the next bit: Netflix is breaking itself into two businesses. Netflix will continue streaming movies while Qwikster will be the service that mails you DVDs. And starting soon, video games as well.

So from now on if you want to manage your streaming queue, you’ll be going to, but if you want to manage your physical delivery queue, you’ll be going to Qwikster. For some reason these two sites will not have integration, meaning the ratings you give films on Netflix will not be reflected on Qwikster. I’m not sure why that is, to be honest, and it’s kind of a bummer. You will get two monthly charges and they will, together, equal your old charge from Netflix. There will be no further price increases.

I’m not entirely sure what’s to be gained by this. It sounds sort of like they’re planning on just kicking DVDs to the curb eventually, but why spin off a new company? The reality is surely something to do with the loss of a million subscribers in the last quarter and the resulting stock market bashing the company has taken. This smells like ‘bold action’ intended to convince traders that the company has a strong vision for the future. The irony is that their strong vision has been in place for years - it’s streaming, and it’s completely the future of home video.

Read Netflix CEO Reed Hastings’ blog about the change.