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All the angry Netflix protestors can put down the pitchforks and relax, DVD rentals aren't going anywhere. Following an intense consumer backlash opposed to the idea of spinning off its DVD-by-mail business into a separate entity, Netflix this morning said it no longer plans to do that and has scrapped Qwikster before it ever got off the ground.
"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," Netflix founder and CEO Reed Hastings said in a blog post. "This means no change: one website, one account, one password... in other words, no Qwikster."
In an email to Bloomberg, Hastings pointed out that Netflix has been very good about moving quickly as a business, but in this case it simply moved too fast.
Netflix announced only weeks ago that it would sever its DVD-by-mail business and focus its efforts entirely on streaming media, which effectively raised the price for people who wanted to continue to enjoy both services. Consumer reaction was almost universally negative, not just because they were being asked to pay more for both services combined, but also because the two sites would be entirely separate: separate billing, separate queues, separate websites, separate everything.
Probably the real reason why Netflix is backpedaling isn't because of all the angry comments, but the effect all the commotion has had on its stock price. Netflix said it expected to lose about a million customers, and this made investors skittish who promptly sent to the stock price to a 52-week low of $107.63, far below a July high of $304.79, according to Hollywood Reporter. Netflix's stock has risen 6.8 percent since Hastings announced the cancellation of Qwikster.
Comments are closed on this article
DarthBalhz
October 10, 2011 at 5:42pm
To me this is just spin. I don't buy that it's just because of the splitting of Netflix and Qwikster but because of the 60% price jump for combined. Now that Qwikster is off the table I'm sure those 1 million subs will come running right back....... or not. Am I off on this? If there had never been a mention of the split and it was simply a huge price jump or to keep one or the other, would Netflix still have taken a hit to the subscriber base?
I buy this as much as Apple killing the $1 TV show rental saying that their customers "preferred" to buy the shows for $3. BS!!!! If that was the case then why drop the $1 for the many people that really wanted to rent for $1. So glad the Apple TV 2 was only $100. Just no more TV shows from Apple. Hello Hulu.
bling581
October 11, 2011 at 10:12am
The customer drop off started with the price hike, this was just the "icing on the cake" so to speak. Definitely not a good metaphor for this topic but couldn't think of anything else.
bling581
October 10, 2011 at 9:37am
"Hastings pointed out that Netflix has been very good about moving quickly as a business, but in this case it simply moved too fast."
You think? I was saying that since they announced the price increase.
I Jedi
October 10, 2011 at 9:34am
I have a hard time believing that Netflix would make such a blunder of a mistake, and knowing the backlash from their users that they would receive for this move. To me, this seems like they intentiionally meant to not use Qwikster at all as a way of getting customers upset and wanting to things to remain the same for the sake of PR. I'm probably totally wrong and off my chain, but why even make such a crazy decision to reform your company radically, and then decide a month later that you're going to keep the status quo? Sure, we could say that perhaps they miscalculated how many pissed off users there would be, but then again, why make a company split right after you jacked the price up on customers?
praack
October 10, 2011 at 10:49am
interesting point- another possibility is that they were trying to get more people to drop DVD completly and expected to see streaming numbers bump up
and instead started to see subscriber numbers just drop as DVD customers (who are also streaming ) left for other pastures
that plus the wall street news of lower stock prices - after such a tremendous loss before- yeah that would get thier attention
bling581
October 10, 2011 at 9:51am
One would think that there is some complex reasoning behind their recent moves, but perhaps it was just a horrible horrible mistake on their part. If so, I wonder how their CEO and board couldn't possibly think of the ramifications of upping the price by 62% and splitting the business into two making it significantly more inconvenient for their customers. Or maybe they knew and just didn't care? Either way it was a terrible move.
I Jedi
October 10, 2011 at 9:34am
I have a hard time believing that Netflix would make such a blunder of a mistake, and knowing the backlash from their users that they would receive for this move. To me, this seems like they intentiionally meant to not use Qwikster at all as a way of getting customers upset and wanting to things to remain the same for the sake of PR. I'm probably totally wrong and off my chain, but why even make such a crazy decision to reform your company radically, and then decide a month later that you're going to keep the status quo? Sure, we could say that perhaps they miscalculated how many pissed off users there would be, but then again, why make a company split right after you jacked the price up on customers?
praack
October 10, 2011 at 8:38am
wall street universily went thumbs down on the qwikster idea- both by way of stock price and opinion. this is a double whammy for Netflix as wall street was not happy with the 60 % price hike ealier in the year - shares are still trading 50% less than before and no sign of coming up soon.
I suspect that netflix will need to move out some leadership and show some true vision soon or the stock will drop more
