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Netflix Sells Apples, Qwikster Sells Oranges; Consumers Of Fruit In General Outrage

I’m a fairly recent neophyte when it comes to Netflix. As I’ve been subscribing for just under a year, I have little-to-zero investment in what was once my experience with the service as compared to what it is now. Even then, I didn’t begin seriously utilizing what I had until late March or early April; the loss of Showtime didn’t faze me as it happened before I knew what I had.

The more recent announcement that Starz would be ending their deal with Netflix in 2012 didn’t shock me either. The old media giants are still recoiling from the new ways, and often. Besides that, Starz never really had the best selection as a channel, though my love for Disney borders on obsession. Perhaps the biggest change for Netflix, prior to this week, was the introduction of separate plans for DVD-by-mail and streaming customers in July.  For those following along at home, this was where Netflix began to dip heavily in the eyes of customers. Those who had been with Netflix since the introduction of instant streaming had grown accustomed to receiving both DVD-by-mail and the instant gratification of streaming services. The announcement that they’d have to double their investment in order to receive the same benefits as before was not received well, to put it mildly. However, it makes perfect sense with the spin off and reveal of Qwikster, which will ship games as well as DVDs, as a distinct entity from Netflix.

As of now, it’s still a wholly-owned subsidiary of Netflix, but as time goes on it is certainly possible that Qwikster could be acquired by other companies. In fact, moves of this nature are typically the first step toward such a fate. Being from Louisville, Kentucky, Yum! Brands and its history with PepsiCo is a constant reminder to me that these things happen.

So why is it that so many people seem to think that this is pure economic suicide on the part of Netflix?

The CEO of Netflix, Reed Hastings, sent out an open letter to the public about the split, apologizing for the poor handling of the subscription changes. While some may paint him as out of touch for not understanding just how controversial the move would be, others seem to think that – though there will be significant restructuring costs incurred – the move will allow for both businesses to grow more naturally instead of chafing at the growth of one over the other.

For something of a personal perspective, I dropped down to pure streaming the moment the double plan, er, plan was announced. The last DVD I’d received by mail, Kung Fu Hustle, sat in its iconic case on my dresser for over a month and was returned unwatched. The DVD service had been entirely an afterthought once I’d made my PlayStation 3 the designated Netflix machine. I saw no reason to pay for something I wasn’t going to use and, considering the wealth of content even after the loss of Showtime this year and Starz next, frankly didn’t need.

One negative consequence of the split services is the fact that Qwikster will have an entirely separate website to navigate and utilize. That’s a small, mostly insignificant fact that new users likely won’t be concerned with as they won’t have known a time where they were together. On the other hand, they’ll also be providing the ability to receive video games, whereas Netflix had never appealed to that market previously.

The issue at hand, however, is that those who view this as a problem don’t see the distinct difference in the services. Their argument can be seen as someone convinced that apple orchards should stock oranges and vice versa as they’re both purveyors of fruit, while Netflix would have apple orchards focus exclusively on apples and orange orchards on oranges, both owned by the same parent company.

  • Anonymous

    People aren’t happy with Netflix because they don’t want the business to change, but Netflix has seen the writing on the wall and knows mailing physical DVDs is going to be a big loser as time goes on and streaming becomes the norm. I bet they can’t wait to spin Quikster off on its own or have some sucker buy it and then navigate it down the drain, because that’s the only place for it to go.

  • http://pulse.yahoo.com/_Z4CJFSWSF6NJQ2QO56FEBHKHJM K

    You’re admittedly new to the service and obviously haven’t done the research, as evidenced by the statement:

    “… they’d have to double their investment in order to receive the same benefits as before was not received well,”

    This was not the problem – the problem was that Netflix was doubling its prices at the same time it was decreasing content available through streaming.  Seriously – it’s one thing to increase your rates to keep up with the rising costs of content, or to lose content because you cannot afford it at current rates, but to *raise* rates and *decrease* content is, quite frankly, unethical business-wise.

    You’re also complicating the issue of apples versus oranges – the issue is not a specific content, but delivery.  It’s not going to an apple orchard and demanding oranges – it’s going to an apple orchard and the owner demanding you keep applesauce and apple cider in two separate baskets, and ring them up on two separate bills (and oh – each bill must have a minimum of $10 purchase).

    Yes, streaming and DVDs are different – no one’s saying they’re not.  But they aren’t different enough to warrant the amount of complication that Netflix is entangling itself in.

  • Anonymous

    Wealth of content?  You need to take another look.  Netflix’s streaming library is crap, and when the Starz titles go, it’s going to be even crappier.

  • http://www.facebook.com/profile.php?id=1631034305 Catherine M. White

    Today the reason I use Netflix and love it is that I like having choice. And when you take my choice away then I will stop being a customer as there is no value to me.  As it stands the current selection of what they can stream vs. what can ship on DVD is about 85%  only available via DVD. Most of the time its the new stuff.  But together I can usually get everything I want in one spot for one monthly fee. The value to me is that I don’t have to chase it around on Hulu, Itunes or pay my crappy Cable company for new movies each time.    So unless they planning to change their streaming model to carry everything, then quite frankly from a content perspective I don’t see how they can win this game by splitting it up. If I was a Netflix exec then I would listen to the outrage and understand what the people want. Unfortunately most execs can’t see past their own quarterly bonus.  Netflix does an amazing business but I see this slipping away from them if they don’t pay attention and go the greed route. 

  • Talesin BatBat

    I cancelled my account when the ‘new plan’ was introduced. No value-add, reduced capability AND increased cost? There’s no way to spin that as anything other than ‘we got your money, ha ha’. It’s a blatant greed-grab; even splitting the plans and offering a ‘bundled rate’ wouldn’t have been so aggravating.
    Sure, I could afford the extra couple of bucks. But their behaviour means that they get NONE of my money, now. I know quite a few others who feel the same way, and have cancelled for the same reason. I don’t deal with bullies. Raising rates ‘because we can’ is just a jack*** move, and generated more ill will than two bucks per subscriber is worth.

  • http://www.facebook.com/heatherwanderer Heather ‘Chatterbox’ Branson

    I don’t understand why everyone talks about streaming being the new wave of the future and dvds being trashed….hello, not everyone can afford a streaming device…not everyone can figure out the tech necessary to stream from your computer to your devices, ect. Some of us are struggling in a financial blackhole as the jobs disappear…it *was* a cheap alternative to buying dvds or driving to the local redbox, now…its not. I ditched the streaming option, I’d been a member of Netflix for a long time, and only ever streamed 3 or 4 movies, cause their selection already was subpar, the option to use the streaming was nice…but not nice enough to double my costs.

  • http://pulse.yahoo.com/_Z4CJFSWSF6NJQ2QO56FEBHKHJM K

    I agree – it’s the future for *some* people, not all.  I spent a year in a rural town where  streaming wasn’t an option – the fastest internet was barely better than dial-up.

  • http://twitter.com/DrunkReport DrunkReport.com

    exactly… America wants a fruitstand.. not an apple store and an orange store 

  • GrowUP

    Ummm.. what?? for a few months worth of the DVD subscription you can just buy a streaming-ready blu-ray player like I did for $68.
    Not to mention that I was unaware that “driving to the local redbox” was a huge ordeal. lol.. get  grip
    And if someone is too stupid to google how to stream from computer to TV, why should that stop streaming technology?  Its not hard. Literally. My neighbor’s 5 year old hooks up his dad’s laptop to the tv to watch his Backyardigans. 

    The FACTS are that going the current route, Netflix was losing revenue, margin, and share. It was only a matter of time before they were in the red with their current business model.  This is a self-preservation move, not greed. The real greed is on consumer end who doesn’t realize the convenience they are getting and cry about an extra $8 a month.  $8 a month gets you 2 on demand movies from you cable company. Get some perspective.  Not to mention that most people who complain about $8 a month more spend $70-100+ a month on cable/satellite.

  • nicole.vega

    People are always looking for a deal and I’ll admit I’m one of them. When Netflix raised their prices I knew I was going to throw them out simply because I work for DISH Network and they were planning on releasing the Blockbuster Movie Pass. It finally launched today and since I’m already a DISH subscriber the pass cost me only $10. I now have access to 100,000 DVD movies, TV shows and games available by mail and in-store (no extra charges for Blu-ray or the video games), plus streaming 3,000 movies to TV and 4,000 movies to PC, and 20 premium entertainment movie channels from studios like MGM, Epix, Sony Movie Channel, PixL and more.

  • http://www.starlightjournal.com/ Metaphysical Sciences

    Mail costs too much money to do and they simply have to rearrange biz to meet the new costs of things. Probably half the DVDs get really damaged too, so they have to replace them a lot. 


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