Well, that didn’t last long. And I don’t think any of us saw it coming. Qwikster is dead, and a dual-service Netflix is here to stay. I can’t help thinking this backtracking is a mistake, but I’m clearly in the minority.
Qwikster Lives!
Last month Netflix revealed plans to split the two sides of its business, with streaming remaining at Netflix, DVDs-by-mail moving to Qwikster. Many customers hated the idea, bemoaning the fact it meant dealing with two different companies to receive both services.
However, many analysts took a more objective view on the move, and realized that it made perfect sense in the longterm. Unfortunately that didn’t do the company any good in the short-term, with its stock price tanking, and many customers making plans to cancel their Netflix subscription.
Would Reed Hastings and his board have the confidence to ride out the storm? To remain resolute in the face of bitching from all sides? Knowing that this was the correct thing to do? Er, no. Unfortunately not. Hastings has capitulated, and he may end up regretting doing so.
Qwikster Is Dead…
In a blog post this morning, Hastings announced that, “DVDs will be staying at netflix.com,” and explained:
“It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs. This means no change: one website, one account, one password… in other words, no Qwikster. While the July price change was necessary, we are now done with price changes.”
Wow. That’s a huge admission of failure right there. It’s saying that we embarked on a strategy we believed was right but changed our minds when the customers started moaning. It could be argued that this is a company listening to its customers and responding to their anguished cries, but few companies succeed when they let their customers dictate business decisions.
If people were leaving in droves then I guess there was little option, but I can’t help feeling that had Netflix weathered the storm for a few months then things would have slowly but surely started to improve.
Conclusions
I still think Netflix had the right idea in splitting its business in two, but they clearly fudged the timing and the method employed. Perhaps a better strategy would have been to offer some movement on pricing but still roll out Qwikster. As it is this solves nothing. DVDs are still on the way out, streaming is still the future, and Netflix is still caught between the two.
