Editor’s note: Qwikster is dead on arrival. Netflix announced Monday that it’s scrapping plans to spin off its DVD service into a separate business. In short, Netflix has gotten back together with itself – and dumped Qwikster.
Forget about celebrity splits. Reed Hastings’ announcement that Netflix is splitting into two distinct businesses may very well be the most talked-about breakup of the year.
Netflix’s CEO wrote a letter on the company blog last week, apologizing to subscribers for the way things went down. “It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes,” Hastings wrote. “That was certainly not our intent, and I offer my sincere apology.”
Hastings went on to explain that streaming and DVD-by-mail have become two distinct businesses. “It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to ‘Qwikster,’” he explained.
But is this the right decision? Many experts seem to think so. “[Hastings] knows Netflix absolutely has to flee into the future with digital delivery,” Paul Saffo, Discern Analytics’ managing editor, told BusinessWeek.
So why doesn’t Netlix just focus on the digital side of the business? Bloomberg points out that one of the main issues is that online rights to movies and TV shows are anything but cheap. In order to pay for these rights, Netflix has to maintain its DVD rental service (because it’s still a source of revenue).
One of Netflix’ competitors has also made headlines this week; Dish Network Corp. (which purchased Blockbuster’s assets) unveiled its new Blockbuster streaming service called Blockbuster Movie Pass. The service – which is only available to Dish Network customers – will offer roughly 4,000 movies.
According to The Huffington Post, Dish was showcasing Movie Pass more as an add-on to the company’s subscription service, whereas Netflix stands on its own. But like Netflix (ahem, Qwikster), Blockbuster Movie Pass will also feature DVD-by-mail.
So for the time being, it looks like movie lovers will still be able to rent DVDs the (relatively) old-fashioned way. The question is for how long.