Netflix Splits Services - Keeps Streaming, Creates Qwikster For DVD By Mail

By September 20, 2011
Qwikster coming soon image

In another move to update its company, the entertainment provider is creating two separate companies for its members to subscribe to. The new Qwikster will also rent video games.

Netflix will be separating its two video services - DVD rentals by mail and Internet-streaming - into two separate companies, as CEO Reed Hastings announced yesterday. Netflix restructured their pricing at the beginning of this month from one price for both watching options (with tiered pricing for more DVDs out at one time) to paying separately for these services (streaming, plus DVD tiers) made subscriptions more expensive for many of their customers. Now these two services will be run by separate entities with separate brands. 

Netflix, the company, will now refer only to the streaming video service, while mailed DVDs will now be sent by "Qwikster," referring to "quick delivery," as Hastings explained in their apology letter/restructure explanation quoted in the Washington Post. Qwikster will be launched in the coming weeks, whereupon customers will log into separate Web sites for two services which will also be billed separately, which for those customers who kept both streaming and deliver services during the first Netflix transition will be more time-consuming for queue and account maintenance.

These multiple changes have not been without effect - Netflix  cut its subscriber forecast last week and its shares fell seven percent. “It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes,” Hastings said in today's Business Week.

After the split, Qwikster will also rent video games for an additional fee, in addition to its offerings of DVDs and Blu-Ray discs. 

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