Monday, October 10, 2011

Qwikster no more

The red envelopes will still
say Netflix for the near future
And they back-tracked.  Netflix has announced today they will no longer be spinning off their DVD rent-by-mail service into its own website.  Customer backlash has been loud - Netflix has lost a reportedly one million subscribers due to their latest price increase fiasco - and they were primed to lose even more if the proposed split had taken place.

Why split up video streaming and DVD mailing?  The costs associated with physical media delivery had always been high, with buying disks, postage, lost disks, etc.  Netflix had decided that streaming was the wave of the future, even though licensing costs have been on the rise the last few years, and will probably rise even more in the future.  Netflix has already lost Starz streaming programming due to licensing disputes.  Splitting the DVD service would mean that there wouldn't be as many visible gaps in their streaming inventory (since you won't see the missing items on the list as opposed to now).

Alas, Netflix has to figure out a new way to navigate future waters.  Competition from Hulu, Amazon Prime, Redbox, and other alternatives is only bound to get worse.  I still enjoy the service, and I've been on board since the beginning (I might still have that DVD tray Netflix mailed years ago), but I wonder whether I will still be a subscriber two, three, of four years from now.

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