Netflix & Qwikster: there be dragons

So Netflix is splitting. The DVD business will not be Qwikster, and the the streaming business will still be Netflix.

The reason, of course, given by CEO Reed Hastings, is focus. And it makes sense – from a business point of view. But it’s a major risk just after changing prices and increasing customer dissatisfaction … and that’s dangerous.

From Hasting’s own blog post, perhaps the funniest response is the first:

From Rob McCaskill:

Breaking News: phone companies are separating the talking and listening services they offer. Now, you’ll have one phone for talking and another for listening. This will make it simpler for users and allow the company to focus better on improving the two separate services. (They consulted with the New Coke developers to make these changes more appealing to the public.)

This is more humor than substance. But it scores bigtime on the humor.

But the real problem is queues of what you want, according to Scott Haraldson:

So not only do I pay more for your services but now you are forcing us to operate two queues? I really do not see how you keep a straight face and say this is a positive for your customers.

I don’t agree with this one at all, although it has two likes. First of all, almost certainly the two new entities will collaborate on lists and queues: they won’t firewall two customer databases. Secondly, and more importantly, only the DVD business has queues. The streaming service is much simpler: pick what you want to watch … and watch it.

Others are still complaining about the price increase, such as Geoffrey Yost:

This was not an apology… true apologies attempt to make things right. This was just an attempt at justifying the current high price and that nothing is going to change pricewise, unless one decides to pay more through upgrading. No thanks.

Newsflash, Geoffrey: Netflix (even if you get it and the new Qwikster) is super-cheap. Dirt cheap. Astonishingly cheap. Don’t like the price? Try renting a couple of movies at Blockbuster (if you can find one), or going to a movie theatre.

Here’s maybe the best comment, from Glen Goldstein:

I love Netflix but this all seems to be a solution in search of a problem. I can’t think of a single reason why the CUSTOMERS would benefit from this change.

Gotta agree.

Unless you can make a long term and convoluted argument that over time this is better customers who will get more/better/quicker entertainment with less fuss … this is an internal focused decision.

That said: it will keep the Netflix part laser-focused on the future. And though unpopular, if that works out, it will be a good decision.