<story><title>Netflix Splits DVD And Streaming Businesses</title><url>http://techcrunch.com/2011/09/18/netflix-qwikster/</url></story><parent_chain><item><author>arithmetic</author><text>If you had to pick between DVD and streaming service, and make one of them phenomenally better than what it is now, which one would you pick? DVD, because everyone knows and loves it? Or streaming, because it&apos;s growing rapidly? You get to pick one.&lt;p&gt;With the split, Netflix gets to focus entirely on streaming - make it better for the customer. Which means, more (and better) content, faster and better streaming service, Netflix on more devices, providing Netflix outside US and Canada etc.&lt;p&gt;And Qwikster gets to focus entirely on DVD service - which means expanding the DVD catalog, getting video game rentals for Wii, PS3 and Xbox 360.&lt;p&gt;As a customer, you get a much better Netflix and/or Qwikster experience. As a Netflix employee, I get to focus entirely on making streaming better, faster, available on more devices, and in more regions than we have today, without having to worry about compatibility with the DVD service.</text></item><item><author>alphakappa</author><text>While there may be some business sense behind it, as a customer, I don&apos;t see any benefit for me. It may make things easier for Netflix, but how does it make anything better for me as a customer? This is the second time Netflix has made an announcement about changes that were seemingly for some good reason, but left customers bewildered.</text></item><item><author>arithmetic</author><text>Disclaimer: Netflix employee here&lt;p&gt;The main reason for the split is the realization that streaming service and DVD service are two completely different businesses that need to grow in completely different ways. For example, in case of streaming service, we&apos;ve just expanded to Latin America and the Caribbean (to 43 new countries). In case of the DVD service, we&apos;re adding a new video games catalog.&lt;p&gt;DVD service is still growing - it probably won&apos;t grow at the same rate for very long, but right now, it&apos;s growing. Streaming, on the other hand, is growing at a phenomenal rate. Therefore it makes sense to not hold up the growth of one service for the other to catch up.&lt;p&gt;In the time (about 6 months) I&apos;ve been at Netflix, the one thing I&apos;ll have to call out is the absolute, undeterred focus that the company has. Simply put, Netflix fundamentally believes that it&apos;s best to do one thing really, really, really well, than to do many things reasonably well.&lt;p&gt;Splitting the streaming and DVD service isn&apos;t so much due to lack of ability to design the website to suit both options, but really as an indication that they are turning out to be different businesses altogether.</text></item><item><author>omarchowdhury</author><text>Another thing. Not all users have a device connected to their TV that works with Netflix (like an Xbox).&lt;p&gt;Nor do those same people want to watch a movie or a TV show on their computer.&lt;p&gt;Those people request DVDs.&lt;p&gt;I don&apos;t see the issue with keeping everything under one brand.&lt;p&gt;Netflix became popular because of their DVD-in-the-mail service. It&apos;s a shame to spin that off into a sub-par seeming brand. Just keep it all under one house but &lt;i&gt;emphasize&lt;/i&gt; the streaming service.&lt;p&gt;It&apos;s not like they can&apos;t design their one site to give users an option on what they want (streaming or DVD-in-the-mail).&lt;p&gt;Keep it simple, stupid.&lt;p&gt;If they are doing this because of the economics of the DVD and streaming service, then nevermind.</text></item><item><author>Jun8</author><text>It seems I&apos;m in the minority who thinks this is an over the top reaction to Wall Street pressure. It was clear for a number of years now that Netflix saw streaming as the future. But cutting off the DVD business like that... it&apos;s extreme. A &lt;i&gt;lot&lt;/i&gt; of the movies are not available for streaming. Yes, their streaming portfolio is probably still the best (and has excellent children&apos;s content, my son watches it every night) but why force your users to decide?&lt;p&gt;The problems, as I see them:&lt;p&gt;1. The two parts (DVD &amp;#38; streaming) had different characteristics (bigger collection vs. instant gratification) that balanced each other. This synergy is now gone.&lt;p&gt;2. The attack surface for other companies has just doubled. Netflix&apos;s DVD handling is super streamlined (they have special sorters in postal centers) but there are other strong players like Redbox here. The streaming biz is nothing unique, Amazon can easily get to that level of collection in a short time. Divide and conquer? They just did it to themselves!&lt;p&gt;3. As others have pointed out, the reviews, and user histories will be split. From a subscriber perspective this is most undesirable, now I have to deal with two sites.&lt;p&gt;4. The quality of recommendations will suffer with less data (they weren&apos;t great to start with) after the split.&lt;p&gt;5. How will this affect developers using the Netflix API?&lt;p&gt;6. What will happen to Netflix&apos;s original content creation efforts, this will be a &lt;i&gt;huge&lt;/i&gt; distraction to those. And they are vital.&lt;p&gt;Overall, this has a heavy handedness to it that makes you wish for the comfort of the likes of Amazon.&lt;p&gt;EDIT: This also makes my suspicions that Amazon is gearing up to a massive upgrade of their offering soon. Netflix probably tried to focus on streaming and stay ahead in the game. How? I don&apos;t know.</text></item></parent_chain><comment><author>ctdonath</author><text>As a paying customer,&lt;p&gt;I don&apos;t want my experience dominated by picking between one medium and another.&lt;p&gt;I want to pick from a unified comprehensive content catalog, and get the content on whatever medium is available/convenient.&lt;p&gt;I want a single unified queue which I can append and rearrange with ease, not have to maintain 2+ queues of content separated only by medium.&lt;p&gt;I want to add title X with the intent of seeing it on pristine Blu-ray, and then on a whim watching it right now when streaming rights are negotiated - _without_ having to do a deliberate search on another site (&quot;nope, not streaming yet&quot;).&lt;p&gt;FWIW: I was at Kodak when they decided that the distribution model was more important than the customer experience. You remember Kodak? used to make film for cameras? film? nevermind. Big name in the photography business, now bulldozing five miles of disused manufacturing buildings for tax reasons.&lt;p&gt;Splitting the delivery departments was smart, realizing streaming is the winning long-term move was smart, unifying the customer-facing content selection to cover all media would be smart. If I pick a title, I want the choice of media subordinate, not dominant.</text></comment>
<story><title>Netflix Splits DVD And Streaming Businesses</title><url>http://techcrunch.com/2011/09/18/netflix-qwikster/</url></story><parent_chain><item><author>arithmetic</author><text>If you had to pick between DVD and streaming service, and make one of them phenomenally better than what it is now, which one would you pick? DVD, because everyone knows and loves it? Or streaming, because it&apos;s growing rapidly? You get to pick one.&lt;p&gt;With the split, Netflix gets to focus entirely on streaming - make it better for the customer. Which means, more (and better) content, faster and better streaming service, Netflix on more devices, providing Netflix outside US and Canada etc.&lt;p&gt;And Qwikster gets to focus entirely on DVD service - which means expanding the DVD catalog, getting video game rentals for Wii, PS3 and Xbox 360.&lt;p&gt;As a customer, you get a much better Netflix and/or Qwikster experience. As a Netflix employee, I get to focus entirely on making streaming better, faster, available on more devices, and in more regions than we have today, without having to worry about compatibility with the DVD service.</text></item><item><author>alphakappa</author><text>While there may be some business sense behind it, as a customer, I don&apos;t see any benefit for me. It may make things easier for Netflix, but how does it make anything better for me as a customer? This is the second time Netflix has made an announcement about changes that were seemingly for some good reason, but left customers bewildered.</text></item><item><author>arithmetic</author><text>Disclaimer: Netflix employee here&lt;p&gt;The main reason for the split is the realization that streaming service and DVD service are two completely different businesses that need to grow in completely different ways. For example, in case of streaming service, we&apos;ve just expanded to Latin America and the Caribbean (to 43 new countries). In case of the DVD service, we&apos;re adding a new video games catalog.&lt;p&gt;DVD service is still growing - it probably won&apos;t grow at the same rate for very long, but right now, it&apos;s growing. Streaming, on the other hand, is growing at a phenomenal rate. Therefore it makes sense to not hold up the growth of one service for the other to catch up.&lt;p&gt;In the time (about 6 months) I&apos;ve been at Netflix, the one thing I&apos;ll have to call out is the absolute, undeterred focus that the company has. Simply put, Netflix fundamentally believes that it&apos;s best to do one thing really, really, really well, than to do many things reasonably well.&lt;p&gt;Splitting the streaming and DVD service isn&apos;t so much due to lack of ability to design the website to suit both options, but really as an indication that they are turning out to be different businesses altogether.</text></item><item><author>omarchowdhury</author><text>Another thing. Not all users have a device connected to their TV that works with Netflix (like an Xbox).&lt;p&gt;Nor do those same people want to watch a movie or a TV show on their computer.&lt;p&gt;Those people request DVDs.&lt;p&gt;I don&apos;t see the issue with keeping everything under one brand.&lt;p&gt;Netflix became popular because of their DVD-in-the-mail service. It&apos;s a shame to spin that off into a sub-par seeming brand. Just keep it all under one house but &lt;i&gt;emphasize&lt;/i&gt; the streaming service.&lt;p&gt;It&apos;s not like they can&apos;t design their one site to give users an option on what they want (streaming or DVD-in-the-mail).&lt;p&gt;Keep it simple, stupid.&lt;p&gt;If they are doing this because of the economics of the DVD and streaming service, then nevermind.</text></item><item><author>Jun8</author><text>It seems I&apos;m in the minority who thinks this is an over the top reaction to Wall Street pressure. It was clear for a number of years now that Netflix saw streaming as the future. But cutting off the DVD business like that... it&apos;s extreme. A &lt;i&gt;lot&lt;/i&gt; of the movies are not available for streaming. Yes, their streaming portfolio is probably still the best (and has excellent children&apos;s content, my son watches it every night) but why force your users to decide?&lt;p&gt;The problems, as I see them:&lt;p&gt;1. The two parts (DVD &amp;#38; streaming) had different characteristics (bigger collection vs. instant gratification) that balanced each other. This synergy is now gone.&lt;p&gt;2. The attack surface for other companies has just doubled. Netflix&apos;s DVD handling is super streamlined (they have special sorters in postal centers) but there are other strong players like Redbox here. The streaming biz is nothing unique, Amazon can easily get to that level of collection in a short time. Divide and conquer? They just did it to themselves!&lt;p&gt;3. As others have pointed out, the reviews, and user histories will be split. From a subscriber perspective this is most undesirable, now I have to deal with two sites.&lt;p&gt;4. The quality of recommendations will suffer with less data (they weren&apos;t great to start with) after the split.&lt;p&gt;5. How will this affect developers using the Netflix API?&lt;p&gt;6. What will happen to Netflix&apos;s original content creation efforts, this will be a &lt;i&gt;huge&lt;/i&gt; distraction to those. And they are vital.&lt;p&gt;Overall, this has a heavy handedness to it that makes you wish for the comfort of the likes of Amazon.&lt;p&gt;EDIT: This also makes my suspicions that Amazon is gearing up to a massive upgrade of their offering soon. Netflix probably tried to focus on streaming and stay ahead in the game. How? I don&apos;t know.</text></item></parent_chain><comment><author>Triumvark</author><text>&amp;#62; If you had to pick between DVD and streaming service, and make one of them phenomenally better than what it is now, which one would you pick? DVD, because everyone knows and loves it? Or streaming, because it&apos;s growing rapidly? You get to pick one.&lt;p&gt;Depth of catalog is the most important feature for me. I especially like watching HBO shows without paying tons of money for cable. I also sometimes like watching really obscure films. Films which were released on DVD at one time, but where it may be hard to track down anyone to  authorize licensing for streaming.&lt;p&gt;Which should I pick?&lt;p&gt;Before Netflix, I satisfied my tastes at the independent video stores around town. Netflix killed those. Naturally, I&apos;m sensitive to any changes that might undermine the DVD service.&lt;p&gt;The best solution, as I&apos;ve mentioned before, is to just allow obligatory licensing. Let Netflix convert its entire DVD catalog to streaming. Make it pay a fair statutory fee whenever it streams anything. If a content owner cannot be found, allow the fee to be collected by a designated rightsholder organization (something like ASCAP) until claimed by a verified owner of the content.</text></comment>