8 ms·

It seems I'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 stream

by Jun8 15y ago

It seems I'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's extreme. A lot of the movies are not available for streaming. Yes, their streaming portfolio is probably still the best (and has excellent children's content, my son watches it every night) but why force your users to decide? The problems, as I see them: 1. The two parts (DVD & streaming) had different characteristics (bigger collection vs. instant gratification) that balanced each other. This synergy is now gone. 2. The attack surface for other companies has just doubled. Netflix'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! 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. 4. The quality of recommendations will suffer with less data (they weren't great to start with) after the split. 5. How will this affect developers using the Netflix API? 6. What will happen to Netflix's original content creation efforts, this will be a huge distraction to those. And they are vital. Overall, this has a heavy handedness to it that makes you wish for the comfort of the likes of Amazon. 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't know.

omarchowdhury 15y ago
Another thing. Not all users have a device connected to their TV that works with Netflix (like an Xbox). Nor do those same people want to watch a movie or a TV show on their computer. Those people request DVDs. I don't see the issue with keeping everything under one brand. Netflix became popular because of their DVD-in-the-mail service. It's a shame to spin that off into a sub-par seeming brand. Just keep it all under one house but emphasize the streaming service. It's not like they can't design their one site to give users an option on what they want (streaming or DVD-in-the-mail). Keep it simple, stupid. If they are doing this because of the economics of the DVD and streaming service, then nevermind.
- arithmetic 15y ago
  Disclaimer: Netflix employee here 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've just expanded to Latin America and the Caribbean (to 43 new countries). In case of the DVD service, we're adding a new video games catalog. DVD service is still growing - it probably won't grow at the same rate for very long, but right now, it'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. In the time (about 6 months) I've been at Netflix, the one thing I'll have to call out is the absolute, undeterred focus that the company has. Simply put, Netflix fundamentally believes that it's best to do one thing really, really, really well, than to do many things reasonably well. Splitting the streaming and DVD service isn'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.
  - alphakappa 15y ago
    While there may be some business sense behind it, as a customer, I don'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.
    - arithmetic 15y ago
      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's growing rapidly? You get to pick one. 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. 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. 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.
frossie 15y ago
The attack surface for other companies has just doubled If anything, that is an underestimate. I really can't understand what they are thinking. Since I am interested in both DVD and streaming, up to now I was completely locked into Netflix because of the integrated system - my "Instant" queue is just the subset of my DVD queue that is streamable. If they break that link, and I derive no gain from being BOTH a Netflix-DVD and a Netflix-streaming customer, what is there to stop me switching to Amazon or other competing streaming service tomorrow? Absolutely nothing. This is such a bad decision I actually can't even begin to understand how it made sense to the dude for the whole length of time it took him to write that announcement. Edit: and another thing. Am I expected to believe that a technology company cannot figure out how to run two different business arms with a single customer-facing UI/website? This is something frigging clothing companies do every day.
- Stratoscope 15y ago
  > Am I expected to believe that a technology company cannot figure out how to run two different business arms with a single customer-facing UI/website? Even worse, the technology company we're talking about already does that and has done it for years.
- perucoder 15y ago
  What's to stop you from switching to Amazon? Have you tried watching a movie on Amazon? Way less usable and its hard to find movies sometimes. Netflix has a way better interface and what I find myself doing is checking on Netflix first, and then only if they don't have it, do I go to Amazon.
  - cookiecaper 15y ago
    I've watched things on Amazon Instant in the past and didn't find it any less usable. In fact, I actually find Amazon more usable since it works on my operating system. It's kind of a moot point to say "Well, Amazon has a crappier interface, so Netflix is safe", since Amazon can always update its interface to something more friendly. The important point is that Netflix has given up one of the major incentives to use its service -- the integration of DVD and streaming.
encoderer 15y ago
1. I think that's your best point, and it's true that the real test will be if they can grow their streaming catalog enough. 3. It's not as if this HAS to be that way. In a blog comment Hastings said initially both sites would have all existing and current data. We're technologists here, is it hard for anybody here to imagine how sharing that data would work? 6. How will it be a distraction to now have a company that is solely focused on streaming -- which is the umbrella under which the original content is being created? Wouldn't you agree that the economics of show-running fit a lot more acceptably into a business where the primary cost is content licensing vs a business where the primary cost is dozens of physical warehouses and massive USPS fees?
- bradleyland 15y ago
  Regarding point 1. Netflix just created a huge discoverability problem. We ditched our streaming package and became a DVD-by-mail customer only. Not for lack of want or desire to be a streaming customer though. I'm just not all that crazy about paying their monthly fee for TV shows (I already have cable) and backlist DVD content. We like movies. I can't see how we're not a target customer, but I can't get most new releases on Netflix streaming. Now that streaming and DVD-by-mail are separate companies, how will Netflix convert customers? With completely separate websites, what opportunities will exist to inform me that the movie I'm about to receive in the mail is also available through their streaming plan? I'd like to know that, because the moment they lock up deals for the content I want, I'd be on board.
  - encoderer 15y ago
    "With completely separate websites, what opportunities will exist to inform me " Your comment here is echoed all over HN and the Netflix blog. Obviously being a separate website in no way prevents them from engaging in that sort of cross promotion. Strikes me as common sense. Comments like yours seem to imply an airgap between the two sites. I haven't read anything official that should suggest that.
    - bradleyland 15y ago
va_coder 15y ago
DVDs are on their way out and streaming is now in and he's putting all his efforts into the streaming business. What if Microsoft did something similar? What if the CEO in 1998 put all his efforts and attention into the Web? Results for Microsoft might have been much better.
- Triumvark 15y ago
  > DVDs are on their way out... Streaming has a unique disadvantage: you have to haggle with each individual content owner. Yes, it's cheaper to move bits than stuff. Much. But licensing is a pricey hassle. It's a huge part of the comparison, and as content owners get savvy, it will only get more expensive over time. This should be a signal of how much more right we got the law with physical media. We all want DVDs to be dead, sure. But DVDs would die tomorrow if we just set up an obligatory licensing scheme for this sort of content. If you distribute a movie, Netflix should be allowed to stream it, and pay you a fair statutory fee. (This isn't some a radical new idea or some Communist scheme, it's basically how radio stations work.) Until the law is fixed, DVDs will stick around, lingering on.
  - nirvdrum 15y ago
    Maybe the HN crew wants DVDs to die. But none of my non-technical family has any problem with DVDs. They work in just about everything. They're easy to lend out. They're easy to find (both in stores and when sitting on a shelf in your house). For my part, I still prefer DVDs because I actually like owning the disc. But more than that, I have a 25 Mbps FiOS connection and somehow at least once a week when I'm streaming something, Netflix dynamically changes the quality. It's more annoying than skipping due to scratch discs and the quality comes out terribly. I have no idea if Verizon's playing games, but as long as ISPs lose out with streaming media, I wouldn't want to bank on that business. I'm not looking forward to a world without physical media where content providers and ISPs can dick us around with arbitrary pricing for content.
    - melvinram 15y ago
      That's why I like iTunes, particularly now that they allow TV shows to be redownloaded so now I don't have to worry about using up a ton of space.
jonnathanson 15y ago
"...A lot of the movies are not available for streaming." Quite a lot, actually, including the majority of new releases. And this will only become more evident in the eyes of streaming subscribers when they no longer see most of the new titles listed in searches. (Even the presence of those "Only available on DVD" titles in streaming-service SERPs lent a sort of subconscious, psychological indication of the robustness of Netflix's library). Hard to see what Netflix stands to gain here. Streaming may be the future of media consumption, but there are still a few big hurdles to leap. Placing all the eggs in the streaming basket now feels a tiny bit premature. It's entirely possible now that streaming will win the day, but it'll be a competitor (or two) waving the victory flag.
- deleted 15y ago
  [deleted]
  - jonnathanson 15y ago
    I think you misread my post. I was saying that quite a lot of new releases are not available on Netflix's streaming service.
- cookiecaper 15y ago
  I'll be interested to see if the split compels media companies to make more content available for streaming. Perhaps that's part of the logic behind splitting out the business; Netflix may have reasoned that it will put more pressure on content holders to license that content for streaming if it won't be available on Netflix at all anymore. In this scenario, it seems that Netflix may be throwing the DVD arm under the bus in hopes that it will strengthen their streaming offering.
  - Supermighty 15y ago
    My first thought was: Now Netflix's streaming content won't be bound by DVD by mail quotas.
  - ShawnJG 15y ago
    if that is their intention they're going to be an far rude awakening. Netflix's subscription-based model will never support the new releases that are currently offered on pay-per-view sites. They are now also going to be competing with cable companies who will most likely always beat them with new releases. They should've just made their DVD operation more efficient. The intangible value added to the company is completely underrated.
r00fus 15y ago
Content is everything... and Netflix is finding that losing Starz (and by proxy, Disney and Sony catalog) really really hurts. Why did they lose Starz? Because they are too successful, and their suppliers are nervous about Netflix. Too many subscribers = too much cost. To reduce their size they'll need to split the two services, and let each one compete directly. To be honest, I would love to have Netflix's problems. Growing too fast and having to pivot your business model to keep your agility? Netflix is operating like a startup. Good for them.
pivotal 15y ago
Regarding the API, Netflix announced several months ago that the API was going stop supporting DVD options all together: http://techblog.netflix.com/2011/06/upcoming-changes-to-open-api-program.html http://techblog.netflix.com/2011/06/upcoming-changes-to-open.... This makes me wonder how long they knew that this split was coming, or if it is just a coincidence.
- aaronbrethorst 15y ago
  This was discussed in this thread last night. http://news.ycombinator.com/item?id=3012244 http://news.ycombinator.com/item?id=3012244 ethank points out that the qwikster.com domain name was registered in May 2010.

by Jun8 15y ago

omarchowdhury 15y ago

Another thing. Not all users have a device connected to their TV that works with Netflix (like an Xbox). Nor do those same people want to watch a movie or a TV show on their computer. Those people request DVDs. I don't see the issue with keeping everything under one brand. Netflix became popular because of their DVD-in-the-mail service. It's a shame to spin that off into a sub-par seeming brand. Just keep it all under one house but emphasize the streaming service. It's not like they can't design their one site to give users an option on what they want (streaming or DVD-in-the-mail). Keep it simple, stupid. If they are doing this because of the economics of the DVD and streaming service, then nevermind.

arithmetic 15y ago
Disclaimer: Netflix employee here 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've just expanded to Latin America and the Caribbean (to 43 new countries). In case of the DVD service, we're adding a new video games catalog. DVD service is still growing - it probably won't grow at the same rate for very long, but right now, it'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. In the time (about 6 months) I've been at Netflix, the one thing I'll have to call out is the absolute, undeterred focus that the company has. Simply put, Netflix fundamentally believes that it's best to do one thing really, really, really well, than to do many things reasonably well. Splitting the streaming and DVD service isn'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.
- alphakappa 15y ago
  While there may be some business sense behind it, as a customer, I don'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.
  - arithmetic 15y ago
    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's growing rapidly? You get to pick one. 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. 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. 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.

frossie 15y ago

The attack surface for other companies has just doubled If anything, that is an underestimate. I really can't understand what they are thinking. Since I am interested in both DVD and streaming, up to now I was completely locked into Netflix because of the integrated system - my "Instant" queue is just the subset of my DVD queue that is streamable. If they break that link, and I derive no gain from being BOTH a Netflix-DVD and a Netflix-streaming customer, what is there to stop me switching to Amazon or other competing streaming service tomorrow? Absolutely nothing. This is such a bad decision I actually can't even begin to understand how it made sense to the dude for the whole length of time it took him to write that announcement. Edit: and another thing. Am I expected to believe that a technology company cannot figure out how to run two different business arms with a single customer-facing UI/website? This is something frigging clothing companies do every day.

Stratoscope 15y ago
> Am I expected to believe that a technology company cannot figure out how to run two different business arms with a single customer-facing UI/website? Even worse, the technology company we're talking about already does that and has done it for years.
perucoder 15y ago
What's to stop you from switching to Amazon? Have you tried watching a movie on Amazon? Way less usable and its hard to find movies sometimes. Netflix has a way better interface and what I find myself doing is checking on Netflix first, and then only if they don't have it, do I go to Amazon.
- cookiecaper 15y ago
  I've watched things on Amazon Instant in the past and didn't find it any less usable. In fact, I actually find Amazon more usable since it works on my operating system. It's kind of a moot point to say "Well, Amazon has a crappier interface, so Netflix is safe", since Amazon can always update its interface to something more friendly. The important point is that Netflix has given up one of the major incentives to use its service -- the integration of DVD and streaming.

encoderer 15y ago

1. I think that's your best point, and it's true that the real test will be if they can grow their streaming catalog enough. 3. It's not as if this HAS to be that way. In a blog comment Hastings said initially both sites would have all existing and current data. We're technologists here, is it hard for anybody here to imagine how sharing that data would work? 6. How will it be a distraction to now have a company that is solely focused on streaming -- which is the umbrella under which the original content is being created? Wouldn't you agree that the economics of show-running fit a lot more acceptably into a business where the primary cost is content licensing vs a business where the primary cost is dozens of physical warehouses and massive USPS fees?

bradleyland 15y ago
Regarding point 1. Netflix just created a huge discoverability problem. We ditched our streaming package and became a DVD-by-mail customer only. Not for lack of want or desire to be a streaming customer though. I'm just not all that crazy about paying their monthly fee for TV shows (I already have cable) and backlist DVD content. We like movies. I can't see how we're not a target customer, but I can't get most new releases on Netflix streaming. Now that streaming and DVD-by-mail are separate companies, how will Netflix convert customers? With completely separate websites, what opportunities will exist to inform me that the movie I'm about to receive in the mail is also available through their streaming plan? I'd like to know that, because the moment they lock up deals for the content I want, I'd be on board.
- encoderer 15y ago
  "With completely separate websites, what opportunities will exist to inform me " Your comment here is echoed all over HN and the Netflix blog. Obviously being a separate website in no way prevents them from engaging in that sort of cross promotion. Strikes me as common sense. Comments like yours seem to imply an airgap between the two sites. I haven't read anything official that should suggest that.
  - bradleyland 15y ago

va_coder 15y ago

DVDs are on their way out and streaming is now in and he's putting all his efforts into the streaming business. What if Microsoft did something similar? What if the CEO in 1998 put all his efforts and attention into the Web? Results for Microsoft might have been much better.

Triumvark 15y ago
> DVDs are on their way out... Streaming has a unique disadvantage: you have to haggle with each individual content owner. Yes, it's cheaper to move bits than stuff. Much. But licensing is a pricey hassle. It's a huge part of the comparison, and as content owners get savvy, it will only get more expensive over time. This should be a signal of how much more right we got the law with physical media. We all want DVDs to be dead, sure. But DVDs would die tomorrow if we just set up an obligatory licensing scheme for this sort of content. If you distribute a movie, Netflix should be allowed to stream it, and pay you a fair statutory fee. (This isn't some a radical new idea or some Communist scheme, it's basically how radio stations work.) Until the law is fixed, DVDs will stick around, lingering on.
- nirvdrum 15y ago
  Maybe the HN crew wants DVDs to die. But none of my non-technical family has any problem with DVDs. They work in just about everything. They're easy to lend out. They're easy to find (both in stores and when sitting on a shelf in your house). For my part, I still prefer DVDs because I actually like owning the disc. But more than that, I have a 25 Mbps FiOS connection and somehow at least once a week when I'm streaming something, Netflix dynamically changes the quality. It's more annoying than skipping due to scratch discs and the quality comes out terribly. I have no idea if Verizon's playing games, but as long as ISPs lose out with streaming media, I wouldn't want to bank on that business. I'm not looking forward to a world without physical media where content providers and ISPs can dick us around with arbitrary pricing for content.
  - melvinram 15y ago
    That's why I like iTunes, particularly now that they allow TV shows to be redownloaded so now I don't have to worry about using up a ton of space.

jonnathanson 15y ago

"...A lot of the movies are not available for streaming." Quite a lot, actually, including the majority of new releases. And this will only become more evident in the eyes of streaming subscribers when they no longer see most of the new titles listed in searches. (Even the presence of those "Only available on DVD" titles in streaming-service SERPs lent a sort of subconscious, psychological indication of the robustness of Netflix's library). Hard to see what Netflix stands to gain here. Streaming may be the future of media consumption, but there are still a few big hurdles to leap. Placing all the eggs in the streaming basket now feels a tiny bit premature. It's entirely possible now that streaming will win the day, but it'll be a competitor (or two) waving the victory flag.

deleted 15y ago
[deleted]
- jonnathanson 15y ago
  I think you misread my post. I was saying that quite a lot of new releases are not available on Netflix's streaming service.
cookiecaper 15y ago
I'll be interested to see if the split compels media companies to make more content available for streaming. Perhaps that's part of the logic behind splitting out the business; Netflix may have reasoned that it will put more pressure on content holders to license that content for streaming if it won't be available on Netflix at all anymore. In this scenario, it seems that Netflix may be throwing the DVD arm under the bus in hopes that it will strengthen their streaming offering.
- Supermighty 15y ago
  My first thought was: Now Netflix's streaming content won't be bound by DVD by mail quotas.
- ShawnJG 15y ago
  if that is their intention they're going to be an far rude awakening. Netflix's subscription-based model will never support the new releases that are currently offered on pay-per-view sites. They are now also going to be competing with cable companies who will most likely always beat them with new releases. They should've just made their DVD operation more efficient. The intangible value added to the company is completely underrated.

r00fus 15y ago

Content is everything... and Netflix is finding that losing Starz (and by proxy, Disney and Sony catalog) really really hurts. Why did they lose Starz? Because they are too successful, and their suppliers are nervous about Netflix. Too many subscribers = too much cost. To reduce their size they'll need to split the two services, and let each one compete directly. To be honest, I would love to have Netflix's problems. Growing too fast and having to pivot your business model to keep your agility? Netflix is operating like a startup. Good for them.

pivotal 15y ago

Regarding the API, Netflix announced several months ago that the API was going stop supporting DVD options all together: http://techblog.netflix.com/2011/06/upcoming-changes-to-open-api-program.html http://techblog.netflix.com/2011/06/upcoming-changes-to-open.... This makes me wonder how long they knew that this split was coming, or if it is just a coincidence.

aaronbrethorst 15y ago
This was discussed in this thread last night. http://news.ycombinator.com/item?id=3012244 http://news.ycombinator.com/item?id=3012244 ethank points out that the qwikster.com domain name was registered in May 2010.