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Netflix On Its New Plan: We Don’t Want to Be Borders

A Lesson in Humility

So, fellow Netflix subscribers (or what’s left of you, since a million of you have dropped the service): Did you receive an email this morning from the company’s co-founder and CEO Reed Hastings, saying “I messed up”? And then a lengthy explanation as to what’s going to happen to its DVD service, about how it’s going to be completely dropped from Netflix and turned into a new service called Qwikster, but swearing that there will be no further changes in cost? I got that email too! It was like being in a relationship with someone, then suddenly being told “I’m going to let you pay for all of our dates now, is that cool? Because I’m going to spend my money on inventions instead, but you’ll love those inventions I’m going to invent, I promise,” and then the next morning you get a text saying, “I messed up.” And now, they’re all worried that someone else is going to come up with that invention first, or maybe they already have, and now they just want us back as their girlfriend/customer for moral support (and money), but all they’re really going to do is tell us how pretty we are … I’m sorry, am I the only one who has dated a hypothetical inventor? Anyway, let’s talk about Netflix now. It’s changing again, but not the prices. They promise.

Netflix has been going through a transition, much like puberty — it’s unpleasant and uncomfortable for everyone, and it makes Netflix look kinda gross, all in an attempt to become a bigger, better company. After they announced that they were separating their their streaming and DVD services, causing 60 percent price hikes for users who still wanted to maintain both, about a million people dropped their subscriptions and last week, their stock plummeted 8.31 percent. Not a cool time to be Netflix, to say the least.

But now, in an email sent to those of us who are still subscribing (the content of which appears on the Netflix blog), Hastings explains that in order to keep up with progress and remain a part of the future of streaming video, Netflix will become an all-streaming service and work to expand its offerings while the DVD delivery service will be broken off completely and become a new service called Qwikster. Where you currently find both of your DVD and Instant queues, you will now only see the latter. Qwikster will be its own web site with its own username and password — again, a completely separate service. They will not be integrated.

However, the pricing will not change. You will see two separate payments, but the prices you signed up for when the rates changed will remain exactly the same. This is a promise by Reed Hastings. And a new change that people actually will like is that video games — for Wii, PS3 and Xbox 360 — will be added to the Qwikster service, becoming an added option (and fee) similar to how the Blu-ray option worked on Netflix, an upgrade. Hastings does not include a price on that, and as of this writing, has yet to launch. (But for reference, the Blu-ray upgrade was around $2.)

And why is this all happening? Yes, streaming is the future and even in the present, it’s much more convenient. However, Netflix’s current streaming offerings are not as impressive as their DVD library. (Just one example is Doctor Who — guess how fun it was to try watching David Tennant‘s final specials on streaming, only to discover that one of them was only available on DVD.) But this is what they’re investing in. (Even though Starz is not really interested.) Hastings specifically cites Borders bookstores and AOL dial-up as the reasons Netflix is going exclusively streaming — two companies that were pioneers in their respective fields, only to fall behind and eventually fail when they couldn’t keep up with progress. By separating the two businesses, Hastings says that Netflix can try to focus on providing the best streaming and Qwikster can focus on providing the best DVD delivery. But that way, when DVDs go the way of the dodo, as many believe they will, Netflix won’t have to go extinct with them.

You can read Hastings’ entire statement at the Netflix blog, perhaps leave your unsatisfied comments along with the over 100,000 others who already have today.

(via Netflix)

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