When Netflix announced they were spinning their DVD and Blu-ray shipping off into a separate company, it was met with derision as another bad idea to follow up the raising of prices. It appeared to be an excuse to explain the raised prices by splitting the disc and streaming subscriptions. Yesterday, Netflix dropped the axe and announced they were not creating Qwikster.
It seems like Netflix doesn’t know what it wants to be. The future may be in streaming media, but the physical discs are still a large part of their business. By separating the two and raising prices, they have alienated their users, causing over 1 million of them to leave the service completely, while may others have downgraded their plans to be a single service.
Many people complain the streaming service doesn’t carry enough quality movies and the discs have to wait a month after home video release to be available for rentals. Netflix had a deal with Starz, which Starz chose to discontinue. The Starz deal was replaced with a deal with Dreamworks, but that may not have the breadth of content Starz had because it is limited to a single studio. Netflix is also supposed to be augmenting it with original content, the only one of which announced so far is the series House Of Cards.
Netflix had announced on their developer blog that their API would no longer support discs as well. If that was in anticipation of splitting into two companies or an executive decision unrelated to Qwikster is unknown, but it will be interesting to see if they change their mind on that as well. Will Netflix only be building up the streaming infrastructure or would they return to supporting the discs to outside developers? It is as unknown to those outside of the company as their current motives.
I had written a while back “Does Netflix Care What Its Customers Think?” and it still seems to hold true. Netflix seems more interested in becoming a streaming company than appeasing their existing 23 million customers. Netflix owns 20% of all bandwidth during prime time, but if they continue to alienate their users, how long can that really last?