Hot on the heels of Netflix’s recent announcement of customer losses and stock drops, company CEO Reed Hasting made an announcement late last night that changes the company even more. After apologizing to Netflix customers for the recent confusion, Hasting announced the creation of “Qwikster”, a new subsidiary of Netflix that will now handle all of Netflix’s DVD-by-mail rentals. Meanwhile Netflix will become a streaming-only company.
Of the change Hasting said:
“So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.
It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.”
Existing customers who currently use both DVD and streaming services via Netflix will now have two completely separate accounts. One, at Qwikster.com will be the DVD-by-mail service while Netflix.com will handle streaming video only. As a bonus to Qwikster subscribers, the DVD service will also be adding video games to its lineup for an additional fee, similar to what Netflix does now with Blu-ray discs.
This complete separation of the company will not change the prices back to what they were before the recent change but there will be no further price increases either. In a blog post and e-mail sent out last evening, Hasting says, “There are no pricing changes (we’re done with that!).”
Still confused? Watch as Hasting and Qwikster CEO Andy Rendich explain the changes to the services:
How will this change affect the customer’s view of the company only time will tell but I like the move, as it is less confusing for the average customer. Me? I already dropped the DVD service so I’ll stick with Netflix. What are you going to use? Netflix, Qwikster, or both?
For the full announcement, check out the Netflix blog.