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Quikster dead, Netflix resumes DVD rentals

post #1 of 17
Thread Starter 
Netflix rewinds Qwikster plan

8:29 am October 10, 2011, by George Mathis


The stunning gaffe known as Qwikster has hit the circular file.

Netflix, the popular movie rental company, has decided to not separate its mail-order DVD and streaming video businesses, it announced today.

Mea culpas littered the press release.


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.

This means no change: one website, one account, one password in other words, no Qwikster.

While the July price change was necessary, we are now done with price changes.

A plan for Qwikster to rent video games may or may not move forward.

Since the Sept. 18 announcement to split the companies and increase prices, share values fell from more than $200 to less than $120. Share prices are up almost 10 percent before the bell.
post #2 of 17
Oops, reminds me of the new coke decision.
post #3 of 17
Thread Starter 
By Jeff Reeves
Netflix, (NFLX +4.93%), critics have been very vocal since the Sept. 1 move that separated the former stock market darling's streaming video from DVD rentals. And it has been one wild ride for NFLX stock in recent weeks.

First, we learned that 1 million Netflix customers defected due to the changes. Then, Netflix CEO Reed Hastings stumbled through an apology and the company tactlessly revealed users would have to suffer through two websites with two billing accounts if they wanted both streaming and DVD service. The backlash was big, and shares of NFLX stock went from over $300 in July to as low as $108 per share recently.

This morning, the latest sordid storyline is that Netflix will in fact abandon its plans to separate the streaming and DVD businesses.

Yes, some may think it's a victory for the consumer. The company previously said its DVD-by-mail service would operate via a separate website, Qwikster.com, but now that plan looks to be dead in the water. Hastings released a statement that said, "Consumers value the simplicity Netflix has always offered and we respect that." Netflix shares were soaring as much as 10% in early trading today on the move.

But remember one thing: Like a B movie lab experiment that goes wrong, wreaking havoc on small-town America, this Netflix debacle is not so easily resolved by wishing it away.

Here's why:

Some subscribers are gone for good: Keep in mind that of the million customers lost, the lion's share came from the DVD side — from a projected 3 million to 2.2 million. If Netflix thinks it can just promise to keep the DVD rentals in-house and win them back, it has another thing coming. Many consumers complain that Netflix offers a poor library of new releases — just look at the current Top 100 movies shipped, and you'll find The Blind Side from 2009, Crash from 2005 and The Bucket List from 2007 in the top three spots. Not exactly recent hits. The fact is many mildly dissatisfied customers sometimes stick around out of laziness or complacency. Once they're gone, however, they need more than the status quo to return.

DVD business publicly revealed as disposable: Many folks had speculated that the biggest reason Netflix was going down the Qwikster road was to prepare the company for an inevitable spinoff. Hastings himself admitted that "my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming" and that "DVD by mail may not last forever." After treating your customers so carelessly and making those harsh statements (however true they might be), how can the movie-watching public ever feel like you truly care about their business — or more importantly, you will truly ever listen to future complaints?

Netflix's poor leadership exposed : When Netflix revealed a dual-pricing model to combat the rising cost of streaming, many folks thought it was no big deal. Unfortunately, the move failed to properly measure consumer dissatisfaction. Adding fuel to the fire was the tactless divulgence that Netflix was going to demand consumers suffer duplicate logins and billing for the separate services, and the resulting "apology" from its CEO that was more self-justification than anything else. Now we have the eventual back-tracking six weeks later. Who the heck is steering this ship? And more importantly, the next time Netflix has to make a crucial strategic move with its business — and it will very soon with competitors like Amazon, (AMZN +3.23%) and Apple (AAPL +3.38%), rapidly growing their streaming video businesses — how can anyone trust NFLX leadership to do the right thing? And by the way, amid this mess we learned that Netflix will lose its Starz titles in January , accounting for 8% of its total streaming library. Not very encouraging to the streaming-focused growth plans of this company.

Sorry, Netflix, but this monster has already gone on a rampage, and it's not as simple as calling him back inside. It's going to take a an army of PR workers with torches and pitchforks to tackle this beast — and many months of vigilance to ensure there isn't a sequel to this disaster and the damage is fully repaired.

Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook .
post #4 of 17
Yep. So many huge PR gaffes. Their CEO ought to be fired, or resign out of shame. I was really happy with my service--didn't even care too much about the initial price increase (other than the amount, the lack of incentive to bundle, and the amateurish explanation), but this whole fiasco has really soured me to the entire service. Netflix lost my DVD business, and will likely lose my streaming business sooner than later.
post #5 of 17
well, nobody is talking about the price increase anymore. I'm not saying this was all a PR plot (if it was, it was a really bad one in my mind), but now the company gets to be a "hero" by listening to their customers.
post #6 of 17
I look at it this way. For most rentals I want BD so I'm stuck with a disk service. The only option that comes close in streaming is Vudu with their HDX but the price is way too high. I've no Redboxes conveniently located and I want a deeper BD catalog than one of their kiosks can provide.

For a lot of older stuff Netflix streaming quality is fine IMO. So the fact that I can have a 1 stop shop of BD and streaming and can just decide based on title whether to stream or wait for the BD is ideal in my case so I'm thrilled they're keeping the company whole. It was a horribly dumb move for the customer. It's still the best deal around. Try getting a new release rental anywhere for streaming. Just 1 movie is half the price of a streaming plan.

Of course if they plan on selling off the streaming to Apple or the disc rental to someone else then I suppose it kind of made sense I guess.
post #7 of 17
Quote:
Originally Posted by JMGNYC View Post

I look at it this way. For most rentals I want BD so I'm stuck with a disk service. The only option that comes close in streaming is Vudu with their HDX but the price is way too high. I've no Redboxes conveniently located and I want a deeper BD catalog than one of their kiosks can provide.

For a lot of older stuff Netflix streaming quality is fine IMO. So the fact that I can have a 1 stop shop of BD and streaming and can just decide based on title whether to stream or wait for the BD is ideal in my case so I'm thrilled they're keeping the company whole. It was a horribly dumb move for the customer. It's still the best deal around. Try getting a new release rental anywhere for streaming. Just 1 movie is half the price of a streaming plan.

Of course if they plan on selling off the streaming to Apple or the disc rental to someone else then I suppose it kind of made sense I guess.

How long until they get new releases and do they get all of them?
post #8 of 17
I just read they are considering changing to "Hollywood Video Online".
post #9 of 17
I for one switched to Blockbuster online due to Netflix ticking me off with all of there antics and am loving it! The price is the same but I get the benefit of getting new releases when they are new. The in store exchange feature is also nice, if we forget to mail the disc back right away we can go old school and drive to the neighborhood Blockbuster pick out the new movie, give them the disc I was would have mailed and be home watching a movie in no time. The movie from the store has to go back to the store before they will send out the next online disc but there is no time limit on turning it in. I kept Netflix for the streaming.
post #10 of 17
@cheezit73: There's something I wondered about the Blockbuster plan. When your return the movie that originated from the store, can you exchange that for another in store movie or do you have to wait for the next one in the mail?

And to stay somewhat on topic, I cancelled my Netflix disc plan when they raised the prices on Bluray (since that was all I wanted) and went to streaming only. Started renting at my local Blockbuster (and now Redbox since they now do Blurays) and I've been happier than I ever was with the Netflix disc mailings.
post #11 of 17
You can exchange it and take one home. However, the exchanged movie when returned, will trigger another to be sent by mail.
post #12 of 17
So as long as there are no other titles in my mail queue, it won't matter. Thanks.
post #13 of 17
Quote:
Originally Posted by cheezit73 View Post

I for one switched to Blockbuster online due to Netflix ticking me off with all of there antics and am loving it! The price is the same but I get the benefit of getting new releases when they are new. The in store exchange feature is also nice, if we forget to mail the disc back right away we can go old school and drive to the neighborhood Blockbuster pick out the new movie, give them the disc I was would have mailed and be home watching a movie in no time. The movie from the store has to go back to the store before they will send out the next online disc but there is no time limit on turning it in. I kept Netflix for the streaming.

Hmm never considered blockbuster thanks. I see that they charge $9.99 a month for one disc out at a time, does that include blu ray?

Also for the store exchange I just prove I'm a member somehow and pay nothing at the store to exchange my disc?
post #14 of 17
Quote:
Originally Posted by whiteboy714 View Post

How long until they get new releases and do they get all of them?

They pretty much get everything on BD if it's been released on BD. Some studios require a 28 day lag after release before Netflix gets them so they can maximize their "sales" window. There's always enough to watch that I don't really even notice having to wait honestly.

I suppose if I had to see something on release day I could rent it from iTunes or Vudu or on my cable box as a PPV.
post #15 of 17
Quote:
Originally Posted by JMGNYC View Post

I look at it this way. For most rentals I want BD so I'm stuck with a disk service. The only option that comes close in streaming is Vudu with their HDX but the price is way too high. I've no Redboxes conveniently located and I want a deeper BD catalog than one of their kiosks can provide.

+1. RedBox is fine if I get on a long waiting list for a movie I'd like to see, but I generally have no problem waiting for anything to be released. Chances are I'll rip it to my server and watch it when I find the time so there's no urgency involved on my part. As such, I have no interest in any type of streaming service. I've always got a backlog of movies to watch. I don't have a Blu-Ray drive in my HTPC or a standalone player so the only way to watch rental BD discs is to rip them to a hard drive for playback. I just don't get around to playing them back right away.

IIRC, Blockbuster doesn't have the same 28-day restriction on new releases like either NetFlix or RedBox. I used to have BB Online for a while, including unlimited in-store exchanges. I found their library to be sorely lacking in comparison to NetFlix and I really had to search the shelves to find anything I'd be remotely interested in viewing beyond the new releases.
post #16 of 17
Quote:
Originally Posted by G-- View Post

You can exchange it and take one home. However, the exchanged movie when returned, will trigger another to be sent by mail.

I will have to try that. I was under the impression you could only exchange "by mail" titles for in store titles.
post #17 of 17
Blockbuster sounds pretty cool actually, anyone know if it has any streaming?
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