The Netflix and Qwikster Plan Doesn't Make Sense, and That's What They Want

Today, Netflix apologized for the lapse in communication when they made their price increase and explained that they were launching a new service called Qwikster, which will handle the DVD side of the business.  The new service will still have the same cost as a Netflix DVD plan but will just be on a different website, run by a separate team, and under a distinct brand.  Did that sentence just confuse you?  The blog post that Reed Hastings wrote won't make it any clearer.

It seems that an organization renowned for its resolute focus and unique culture is bending to criticism and adding some bureaucracy and confusion to their offering.  Now, if you want to utilize both of Netflix's offerings, including the one that was the original foundation of their success, you have to go to separate sites and have different interactions.  It's really a bizarre decision.  However, with the company stock plummeting 30% in a single week, I guess it was kind of shakeup the company felt was necessary.

My personal opinion is that this is just an extension of the underlying tone in the original move that Netflix believes the future of DVDs is grim and not very profitable.  That's why they made the original decision, to focus on their most profitable customers.  Now, by screening off Qwikster, the Netflix brand is free to ignore what they see as the past and focus on the future.  I think they set up Qwikster so DVDs could have a place to die rather than a place to flourish.

With that being said, it still seems a little rushed to launch a new brand just to further yourself from a legacy business you don't believe in.  I do think it makes sense from Netflix to send an even stronger signal that they're a streaming not a DVD company, but I thought the 100% price hike had already accomplished that.  To me, this isn't a sign of an ailing Netflix, but just a misstep and some pain in getting to where they ultimately want to be.  I still think the company has a bright future and will continue to grow (Qwikster is another story though...).