I remember that when a movie became available for streaming if it was in your DVD queue, you would get notified in the UI. I don't know if that is true anymore?
Hastings replied to that question in the Netflix blog post's comments: [1]
Question: "If a film I search for on Netflix is not available for streaming, will the website still tell me if the DVD is available? Or must I search twice?"
Reply: "ouch. You'd have to search the second place if we didn't have it in the first place."
This decision was not made over night, and this change has been coming for quite a while. In fact, if you go look at this post on Netflix's API blog dated 27 June 2011[1], you'll see:
As of Oct. 14th, 2011, the Netflix API will be focused exclusively on offering content and functionality from the streaming catalog. As a result, we will be discontinuing the support of DVD-related features in the Open API.
They go on to say that this is to support long term goals around internationalization, but that does not, by any means, preclude this split.
And the company split isn't "related to negotiating royalties for streaming based on streaming subscriber numbers, not the combined numbers" as waterlesscloud indicated? The public explanation of better focus for each business is sensible, but I think there is a not insignificant impact to licensing that drove the decision as well.
I know the Netflix name was chosen from the beginning to be compatible with a future streaming business, but seeing this chrysalis-style business plan unfold now is quite astounding in its long-term thinking.
I read this and my brain immediately thought it had to be an April Fools joke. It took a second or two to remember it is September.
Regardless, my hat is off to them for betting the company's name on their streaming business. I know that's the only part of their service I use anymore -- I've had the same DVD checked out for over a year because I couldn't be bothered to deal with the perceived hassle of managing my queue and planning what I want to watch in advance.
Same here - I actually caught myself looking up at the date on the taskbar before realizing the same thing. I think the ridiculousness of the 'Qwikster' brand name was what made me doubt it at first.
In my opinion, this is definitely the obvious and correct move. It isn't a surprise that Netflix wanted to head towards a stream only business model, but this makes it crystal clear that Netflix is (at the moment) a premium streaming video company. I mean look at them, thats all they do now!
The still face some big hurdles with all their streaming content deals, and the outcome will likely be what makes or breaks the Netflix we all know and love. Premium content providers (HBO, Starz, and now AMC, etc...) will always hold the upper hand here, and many already have streaming products in place. If not, its rather trivial to create nowadays.
My prediction: Netflix becomes an original content powerhouse that harnesses the sort of democratic whimsey of the web. "House of Cards" is their toe in the water. I really see no other direction that is feasible with content providers fragmenting into their space and hoarding their popular original content.
Interesting prediction. It would make a lot of sense to produce/fund more original content. It's definitely the direction the streaming business has to follow. If cool and original stuff is on Netflix only, it will be good for them and other original content producers may be more inclined to be there.
"this makes it crystal clear that Netflix is a premium streaming video company. I mean look at them, thats all they do now!"
Yeah, well...now they're providing a commodity service. Renting DVDs through the mail has/had a huge infrastructure advantage for the established player. Streaming video over the internet? There are dozens of sites that do it well. The technical advantage is far less sustainable, because it isn't nearly as difficult.
Once you're running a streaming-video business, the only differentiating advantage is content -- and you're in a weak position to negotiate for that content. Whereas before, the studios needed Netflix to distribute their content to consumers, the internet has turned the tables.
Delivering streaming media content has some infrastructure costs as well. Bandwidth is not free (it will get worse if Net-neutrality dies) and one also needs to have a CDN to effectively deliver content to different geographies.
Netflix has one thing that most streaming video sites don't, and that's massive market penetration. In my living room, I have 5 devices capable of Netflix streaming, as well as every mobile device I own.
Amazon is probably second with their offering, and even then I don't own any devices that can stream Prime Instant Video (my TiVo can download from Amazon, but isn't compatible with Prime's streaming). Any Netflix competitor has a huge hurdle to overcome to be as successful as they've been.
They first obtained that advantage through their infrastructure investment in DVDs though, not through steaming. Any Netflix competitor now has a much smaller hurdle to overcome to be as successful as they've been. From the customer's viewpoint they went from having a relationship with a single company that had two offerings to a relationship with a company with a single offering that is somewhat lacking.
If I were the new CEO of Quixster or Kwikstr or whatever the hell it is, I would immediately start looking around at who I can partner with to get streaming content. Actually, isn't Quixtar the name of a MLM scheme?
This move makes no sense. Seems like Wall St. pandering garbage.
"Netflix has one thing that most streaming video sites don't, and that's massive market penetration. In my living room, I have 5 devices capable of Netflix streaming, as well as every mobile device I own."
And those devices are electronics, which have the shelf life of dead fish. You have to stay relevant to make it into the next generation of products. Nobody is pre-bundling a service that a) has a small subscriber base or b) doesn't have good content.
Moreover, many devices (like my own television) let you trivially download apps from any provider. I got amazon streaming on my television on the day it was announced. Being installed on a device isn't a competitive advantage when anyone can do it.
The elephant in the streaming office is the lack of blockbuster titles, many of which are only available through their DVD by mail business. If they're betting everything on streaming i'm guessing (hoping) that they've also figured out a solution to this problem. Otherwise, they've lost the big benefit of credibility that DVD by mail brought to their service.
The answer to getting new releases is obvious and I'm surprised they haven't done it already: pay-per-view. 3.99 for new releases, back catalog is free. What Amazon does, except they would have the advantage of the massive customer base. They could probably work out some deals with the studios where if a movie makes X amount on PPV it gets to move to the back catalog for a minimum of 6 months. Having that customer base would give them the leverage to make those types of deals.
Totally agree, I know first-hand how hard it is to come up with a good name coupled to an available domain name, but I would expect better from Netflix.
Honestly, I have to believe that it is some sort of homage to The Simpsons' Qwik-e-Mart. Otherwise, it is probably the worst name I have heard in a very long time, probably since Motorola's consonant craze started by RAZR (ROKR, PEBL, etc)
I think this is a good move simply because the two divisions have contradictory goals at this point.
For example, the Qwikster division should be looking at finding ways to deliver DVDs quicker (Kiosks for example). But that's not something that would ever occur to Netflix because they're focused on streaming as the future.
Which is where the contradiction comes in. It is hard to run a business unit when the goal of the company overall is to kill off your unit.
That said I think announcing it today is foolish. Even if it was their original plan to do so announcing it right after a stock drop makes the decision look rash. IMHO they should have put this announcement off for a couple weeks.
I don't think any shareholders of consequence are going to think they just made this decision a day ago. Maybe they announced it after the stock plummeted because the assumption is it won't go down that much further, where a 2nd announcement after it rebounded might send it down yet again.
Also I don't get the creating of a new brand altogether. Netflix is a popular brand and a household name. Who knows qwikster? Looks indicative of a future split up of the company to me.
In terms of stock timing, I have a hard time believing that this kind of move was completely held secret. This takes a lot of prep work, and whispering has to go on, and rumors spread fast to connected people who can profit. I suspect the excessive reaction last week to the news of that week may have actually been boosted by inside knowledge about this move today.
So if any of that's true, you can't exactly assume that last week's stock move would have been the same in an alternate world where they weren't going to announce this today. At any rate, appearances generally give way to fact eventually.
I researched Netflix for a project back when they had around 8 million subscribers and the biggest part of their business was direct mail DVD.
The strides they've come to have the Netflix brand as more than just a DVD rental service are immense. My only worry about this move is that they lose all of that brand recognition with "Qwikster."
Biggest downfall here will potentially be the separation of ratings. Dvd and streaming customers will have to rate dvd first and then see it as unwatched in streaming later?
I think of Netflix as my repository for "what I have watched" and teller of "what you will want to watch". I don't tie the brand to a specific delivery mechanism (dvd or streaming).
"...the Qwikster.com and Netflix.com websites will not be integrated. So if you subscribe to both services, and if you need to change your credit card or email address, you would need to do it in two places. Similarly, if you rate or review a movie on Qwikster, it doesn’t show up on Netflix, and vice-versa."
Wow. I had previously thought that their pricing change was forcing consumers to effectively choose between streaming and disc-based services, but didn't expect that they'd actually go this far and completely cut the cord between the two.
Considering the how much less efficient it is to mail movies than it is to download them in an age of high gas prices and fast internet, Netflix killing or spinning-off it's dvd service was an inevitability. I'm just not sure that right now the streaming service by itself has the selection to keep subscription numbers high enough to maintain sufficient leverage with content providers.
Momentum is very important with the type of model they have: the more content Netflix loses to studios who start their own streaming services, the less appealing the Netflix service becomes to subscribers, which both weakens the argument for studios to stick with them due to the size of their subscriber base and also sets a positive example of succeeding without Netflix that other studios can follow.
My guess is that the logical split has to do with future contract negotiations. Netflix has no ties to DVD rentals, so maybe this aids them in the deals they are able to make.
As I understand it, most of the deals between Netflix and the studios are revenue sharing deals. So the studios have a vested interest in increasing whatever metrics they are basing the revenue sharing on. They could see streaming availability as hurting the DVDs 'sales.' Though this would apply industry-wide anyways, so I don't know if this would really put the streaming side of things in a better negotiation position.
Yep. Also netflix has no value add in the streaming business. Streaming a video just isnt that hard and they are not content owners. The content owners have no incentive to put their stuff on netflix.
The content owners will try to insert ads and cut out middlemen.
On the other hand the customer is shafted big time by being forced to remember what he wants to watch on dvd separate from streaming.
"Qwikster will also now offer video game rentals through the mail"
While I wouldn't sign up full time for a game rental service I would be interested in getting a game now and then rather than a dvd. Suffice it to say for my needs a dvd in the mail fit my needs exactly and I will continue paying for that.
Edit: not to mention from what I hear games always have a long waiting list on other services. I am more than happy to put a game at the top of my list and getting it at some point in the next two months, but meanwhile getting dvd's that I want.
I'm hoping it comes with the requisite netflix...err qwikster... efficiency that I've come to expect. We tried Blockbuster for this, and it was a nightmare. Getting a game from them was an exercise in patience. We were with them for two months and didn't receive a single one:)
I had Netflix for a few months, I used it to watch the entire Battlestar Galactica. After that, I went through and searched for 30 different movies to watch, and they weren't available, and I'm not talking about new movies. None of the Indiana Jones', Star Wars', Rockies, Bladerunner, etc. Now with the Starz debacle, and with content providers getting ready to pound them with price increases, Netflix is in real trouble.
Yes, streaming is the way to do it. I love streaming. But I don't think it will be through Netflix. This sounds like a company in its death throws.
I simply don't understand why they would split themselves up into 2 companies. The only reason why I can think of why they would cut themselves into 2 companies, is so that the content providers can't use the DVD business' cash flow to pay for the content. So content providers can't charge an arm and a leg because the cash flow of the streaming side would be much smaller.
However, the miscalculation here is that content providers can simply make their own content available themselves through streaming. Which is already happening in other continents, and even in the US through Google, Facebook etc. I think Netflix has severely miscalculated itself, and this may be the end.
The only reason why I can think of why they would cut themselves into 2 companies, is so that the content providers can't use the DVD business' cash flow to pay for the content.
My thoughts exactly, I assumed the original separation was done so hollywood couldn't bargain over dvd profits, perhaps this move was done to make that wall even stronger. I fear for the future of netflix, it's an easy choice to have a subscription now, but what happens when the major studios get involved and start demanding serious money for their content.
I too think its a terrible idea but,
What a stupid question. (how much does Amazon cost with Prime?) I hope you realize that if you cannot figure out an answer to that questions in like 10 seconds yourself, you probably shouldn't be commenting things like companies pivoting.
(And an equally stupid answer. Prime is $79/year if you are not a (mom or a dad or a student))
I'll throw it out as a side note, because in all the discussions I've read on Netflix of late no one seems to mention it: Netflix has FANTASTIC kids content available for streaming. My kids would revolt if we cancelled our service. That alone guarantees my business until there is a truly compelling replacement. I cannot believe we're the only family like this. And while this is probably not a large enough market to sustain them (let alone power growth), they do seem to have a pretty good sense of how people engage with their content - and my guess is that their deep long-tail of streaming content actually holds more appeal than might be guessed. To be honest, my only frustration with them of late has been the fact that my streaming queue is overrun with "Bob the Builder" & "Caillou" when I'm actually looking for something to watch. Perhaps this new, sharper focus on the streaming side will enable them to improve things like this? Here's hoping they survive this transformation and emerge stronger for it.
Amazon Prime streaming is more than enough for children, and most families already have it.
And the kids don't care at all who they get the shows from.
I expect Amazon to continue to aggressively compete in this area, not to mention Apple and someday, Google. Netflix is giving away their core advantage -- a huge content library and DVD/Blu-ray backup for anything not-yet streamed. No one else has that. Now they're just like everyone else.
But Amazon Prime streaming is not (yet?) available on the AppleTV that the kids use. Sure I keep meaning to jailbreak the darn thing but I never quite find the time to do so.
Netflix has huge penetration into hardware that Amazon does not have and to me that is a huge leg up for them. Also I can not believe that Netflix does not have an ace up their sleeve, i.e., a serious infusion of streaming content. However, I would be in awe if they did not have that ace up their sleeve and are instead trying to push the content providers into the present so that we can get on with the future.
Yup. My kid is only two, but even I have noticed that Netflix has 6 full seasons of Spongebob and nearly 100 full episodes of Seasame Street. It's pretty important to me that my child not be bombarded by advertisements before he gains any critical thinking skills, so I'll be a Netflix customer for a long time yet, I'm sure. I'm just hoping they use this extra cash to get some better content (or create it themselves) for me.
Wow. I have a 4 year old and a 5 year old, both love getting to pick stuff off Netflix and not once did I think about the fact that there are no ads... that's such an awesome point in Netflix's favour and I can't believe I never realised it before.
Plus, for me at least, it's good in that it forces them to compromise and work it out among themselves. They can watch whatever they want on it (obviously, within their genre) but they have to work it out between the two of them what they are going to watch. With the TV, it's closer to "on or off".
Yes, it's really frustrating that Netflix only allows streaming from the primary account and none of the sub accounts. Anything we stream shows up on the recently watched list for our kids to see.
has everyone forgotten how limited the streaming service is? They should have waited until they at least have a selection. I'm going DVD service, and Amazon for streaming.
And that is my main problem right there. Netflix streaming is good for finding old niche content but for general mainstream content, not so much. And now with Starz leaving....
The blog posting by the CEO was good but he still didn't answer questions about the content problem with streaming. He gave it a one liner at the end as if it was an afterthought.
I am going to keep Netflix for now but I am on the edge. I know one thing, I'm far from an enthusiastic customer.
In theory, however, Qwikster doesn't have to limit itself to DVD's in the future. If it's real focus is shipping speed for items that are rented (or more likely purchased), it could expand into other product lines. Speed of shipping is a process in and of itself, something that very few companies, like Amazon, have gotten down.
I kept my account even after planning on dropping it when the price increase happened, but now I don't really see any reason to keep my streaming account. At least when they were integrated, searching in one place, and having all my reviews in one place provided some additional benefit for me.
Now I don't really see any benefit at all for keeping the streaming portion over Amazon Prime (which I have) and maybe adding Hulu Plus. I'll have to see if having the game option makes it useful for me to keep the DVD portion of my account.
As soon as the sites split, NetFlix looses a great deal of value to me as a customer. Before it was a single place where I could pick movies to see - whether streaming or on DVD, now it becomes a repository of a bunch of okay television shows and (esp. once they lose Starz Play), a mediocre movie selection.
Clearly this will be disheartening to the true user such as myself. By splitting functionality as to prevent easy access to either material nor allowing usage of existing ratings they're continuing the trend toward customer alienation.
I say this almost all the time, but even if Netfix renegotiates for retaining Starz it is still not yet an adequate amount of viewing content for me to wholely dismiss DVD by mail, regardless of where I even stand on the matter in terms of philosophy.
In the end I still gain a larger bill, continued limited streaming content, and a split in usability.
And what of netflix when Hollywood continues to charge into extinction taking Netflix with them?
205 comments
[ 3.4 ms ] story [ 274 ms ] threadQuestion: "If a film I search for on Netflix is not available for streaming, will the website still tell me if the DVD is available? Or must I search twice?"
Reply: "ouch. You'd have to search the second place if we didn't have it in the first place."
[1] http://blog.netflix.com/2011/09/explanation-and-some-reflect...
As of Oct. 14th, 2011, the Netflix API will be focused exclusively on offering content and functionality from the streaming catalog. As a result, we will be discontinuing the support of DVD-related features in the Open API.
They go on to say that this is to support long term goals around internationalization, but that does not, by any means, preclude this split.
[1] http://developer.netflix.com/blog/read/Upcoming_Changes_to_t...
That was the reason behind the original split in the services, so it's probably why they're actually splitting the accounts.
No. Not at all.
The plans were split in preparation for the company split. This has been in planning for a long time.
Regardless, my hat is off to them for betting the company's name on their streaming business. I know that's the only part of their service I use anymore -- I've had the same DVD checked out for over a year because I couldn't be bothered to deal with the perceived hassle of managing my queue and planning what I want to watch in advance.
The still face some big hurdles with all their streaming content deals, and the outcome will likely be what makes or breaks the Netflix we all know and love. Premium content providers (HBO, Starz, and now AMC, etc...) will always hold the upper hand here, and many already have streaming products in place. If not, its rather trivial to create nowadays.
My prediction: Netflix becomes an original content powerhouse that harnesses the sort of democratic whimsey of the web. "House of Cards" is their toe in the water. I really see no other direction that is feasible with content providers fragmenting into their space and hoarding their popular original content.
Yeah, well...now they're providing a commodity service. Renting DVDs through the mail has/had a huge infrastructure advantage for the established player. Streaming video over the internet? There are dozens of sites that do it well. The technical advantage is far less sustainable, because it isn't nearly as difficult.
Once you're running a streaming-video business, the only differentiating advantage is content -- and you're in a weak position to negotiate for that content. Whereas before, the studios needed Netflix to distribute their content to consumers, the internet has turned the tables.
Amazon is probably second with their offering, and even then I don't own any devices that can stream Prime Instant Video (my TiVo can download from Amazon, but isn't compatible with Prime's streaming). Any Netflix competitor has a huge hurdle to overcome to be as successful as they've been.
If I were the new CEO of Quixster or Kwikstr or whatever the hell it is, I would immediately start looking around at who I can partner with to get streaming content. Actually, isn't Quixtar the name of a MLM scheme?
This move makes no sense. Seems like Wall St. pandering garbage.
Yes, Quixtar is Amway.
And those devices are electronics, which have the shelf life of dead fish. You have to stay relevant to make it into the next generation of products. Nobody is pre-bundling a service that a) has a small subscriber base or b) doesn't have good content.
Moreover, many devices (like my own television) let you trivially download apps from any provider. I got amazon streaming on my television on the day it was announced. Being installed on a device isn't a competitive advantage when anyone can do it.
For example, the Qwikster division should be looking at finding ways to deliver DVDs quicker (Kiosks for example). But that's not something that would ever occur to Netflix because they're focused on streaming as the future.
Which is where the contradiction comes in. It is hard to run a business unit when the goal of the company overall is to kill off your unit.
That said I think announcing it today is foolish. Even if it was their original plan to do so announcing it right after a stock drop makes the decision look rash. IMHO they should have put this announcement off for a couple weeks.
So if any of that's true, you can't exactly assume that last week's stock move would have been the same in an alternate world where they weren't going to announce this today. At any rate, appearances generally give way to fact eventually.
The strides they've come to have the Netflix brand as more than just a DVD rental service are immense. My only worry about this move is that they lose all of that brand recognition with "Qwikster."
I think of Netflix as my repository for "what I have watched" and teller of "what you will want to watch". I don't tie the brand to a specific delivery mechanism (dvd or streaming).
Wow. I had previously thought that their pricing change was forcing consumers to effectively choose between streaming and disc-based services, but didn't expect that they'd actually go this far and completely cut the cord between the two.
Considering the how much less efficient it is to mail movies than it is to download them in an age of high gas prices and fast internet, Netflix killing or spinning-off it's dvd service was an inevitability. I'm just not sure that right now the streaming service by itself has the selection to keep subscription numbers high enough to maintain sufficient leverage with content providers.
Momentum is very important with the type of model they have: the more content Netflix loses to studios who start their own streaming services, the less appealing the Netflix service becomes to subscribers, which both weakens the argument for studios to stick with them due to the size of their subscriber base and also sets a positive example of succeeding without Netflix that other studios can follow.
The content owners will try to insert ads and cut out middlemen.
On the other hand the customer is shafted big time by being forced to remember what he wants to watch on dvd separate from streaming.
While I wouldn't sign up full time for a game rental service I would be interested in getting a game now and then rather than a dvd. Suffice it to say for my needs a dvd in the mail fit my needs exactly and I will continue paying for that.
Edit: not to mention from what I hear games always have a long waiting list on other services. I am more than happy to put a game at the top of my list and getting it at some point in the next two months, but meanwhile getting dvd's that I want.
I had Netflix for a few months, I used it to watch the entire Battlestar Galactica. After that, I went through and searched for 30 different movies to watch, and they weren't available, and I'm not talking about new movies. None of the Indiana Jones', Star Wars', Rockies, Bladerunner, etc. Now with the Starz debacle, and with content providers getting ready to pound them with price increases, Netflix is in real trouble.
Yes, streaming is the way to do it. I love streaming. But I don't think it will be through Netflix. This sounds like a company in its death throws.
I simply don't understand why they would split themselves up into 2 companies. The only reason why I can think of why they would cut themselves into 2 companies, is so that the content providers can't use the DVD business' cash flow to pay for the content. So content providers can't charge an arm and a leg because the cash flow of the streaming side would be much smaller.
However, the miscalculation here is that content providers can simply make their own content available themselves through streaming. Which is already happening in other continents, and even in the US through Google, Facebook etc. I think Netflix has severely miscalculated itself, and this may be the end.
My thoughts exactly, I assumed the original separation was done so hollywood couldn't bargain over dvd profits, perhaps this move was done to make that wall even stronger. I fear for the future of netflix, it's an easy choice to have a subscription now, but what happens when the major studios get involved and start demanding serious money for their content.
(And an equally stupid answer. Prime is $79/year if you are not a (mom or a dad or a student))
I say yes.
And the kids don't care at all who they get the shows from.
I expect Amazon to continue to aggressively compete in this area, not to mention Apple and someday, Google. Netflix is giving away their core advantage -- a huge content library and DVD/Blu-ray backup for anything not-yet streamed. No one else has that. Now they're just like everyone else.
The estimates I saw from February were 4-5 million Amazon Prime customers. That's much smaller than Netflix, much less "most families".
Netflix has huge penetration into hardware that Amazon does not have and to me that is a huge leg up for them. Also I can not believe that Netflix does not have an ace up their sleeve, i.e., a serious infusion of streaming content. However, I would be in awe if they did not have that ace up their sleeve and are instead trying to push the content providers into the present so that we can get on with the future.
You certainly aren't..They actually have a tab called "Just for kids"
Plus, for me at least, it's good in that it forces them to compromise and work it out among themselves. They can watch whatever they want on it (obviously, within their genre) but they have to work it out between the two of them what they are going to watch. With the TV, it's closer to "on or off".
http://mashable.com/2011/09/19/netflix-reed-hastings-video/?...
The blog posting by the CEO was good but he still didn't answer questions about the content problem with streaming. He gave it a one liner at the end as if it was an afterthought.
I am going to keep Netflix for now but I am on the edge. I know one thing, I'm far from an enthusiastic customer.
Now I don't really see any benefit at all for keeping the streaming portion over Amazon Prime (which I have) and maybe adding Hulu Plus. I'll have to see if having the game option makes it useful for me to keep the DVD portion of my account.
As soon as the sites split, NetFlix looses a great deal of value to me as a customer. Before it was a single place where I could pick movies to see - whether streaming or on DVD, now it becomes a repository of a bunch of okay television shows and (esp. once they lose Starz Play), a mediocre movie selection.
I say this almost all the time, but even if Netfix renegotiates for retaining Starz it is still not yet an adequate amount of viewing content for me to wholely dismiss DVD by mail, regardless of where I even stand on the matter in terms of philosophy.
In the end I still gain a larger bill, continued limited streaming content, and a split in usability.
And what of netflix when Hollywood continues to charge into extinction taking Netflix with them?