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Disclaimer: Netflix employee here The main reason for the split is the realization that streaming service and DVD service are two completely different business

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.
  - majikrooster 15y ago
    He must of done a much better job getting the employees to drink the kool aid then the customers
    - ABCD_FUFU 15y ago
      Its probably just a marketing drone. The level of clueless ness at netflix is astounding. How about the we'll get rid of reviewers that are 40 times better than our clueless recommendation system and replace them at a future date with the getsapo facebook? Whats that you say gestapo facebook is illegal? Oh well we didnt want your opinions anyway. We replaced the customer with a robot.
    - cyberguppy 15y ago
      Must...of? http://www.urbandictionary.com/define.php?term=Must+Of http://www.urbandictionary.com/define.php?term=Must+Of
  - MatthewPhillips 15y ago
    You can do exactly that without rebranding the product. They're called divisions. Give each one a CEO, but to the customer they should all be Netflix.
    - fluidcruft 15y ago
      But divisions can't go bankrupt and die as easily. Qwickster or whatever it is has a death sentence. It's value wull be polished just enough to sell it off to suckers. And when it dies Netflix will just shrug.
  - Triumvark 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. 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. Which should I pick? Before Netflix, I satisfied my tastes at the independent video stores around town. Netflix killed those. Naturally, I'm sensitive to any changes that might undermine the DVD service. The best solution, as I'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.
foobarbazoo 15y ago
From the customer's perspective, they are not two separate businesses. They are one, strong business (well, were). Streaming is most valuable when DVD is (a) there as a backup, and (b) managed with the same system. Netflix has seriously decreased the value of their streaming offering by separating out the DVD and de-integrating their systems. There is basically no reason to pay for Kwikster now (terrible name BTW), and the streaming is now an extra cost. We'll have our kids use Amazon Prime, which we already pay for. They're much less choosy for content anyway, and it cuts off another monthly bill. Someone inside of Netflix should have had the balls to tell your CEO this was a stupid idea and customers would hate it.
- sudonim 15y ago
  You don't speak for all Netflix customers when you offer your perspective. I joined Netflix because of streaming and I prefer to look at streaming only. When I joined netflix I got a DVD and didn't return it for a year. I didn't want to return it because I didn't want to get another DVD. In search results I never wanted to see the DVD results. I wanted to see what I could watch now. Content is such a key part of this. If the streaming service had the same or more content than the DVD business, nobody would care. But since they are still building that collection and struggling with content owners, people are freaking out. Time will tell whether this was a stupid idea for the market at large. As a streaming customer, I'm indifferent. As a tech pundit, I think it was an important strategic move and I applaud Netflix.
  - CWuestefeld 15y ago
    I think you're throwing out the baby with the bathwater. There are straightforward technical solutions they could implement to address your complaints, but for those of us that aren't so extreme, there's no easy solution to the way they're breaking our desired usage.
- ams6110 15y ago
  I am a Netflix customer. I don't care what they do with their DVD collection. The only reason I occasionally ordered a DVD is because it was available in my subscription. Since the split, I've canceled my DVD service. I hate DVDs. I don't want to wait for them, I don't want to handle them, I don't want to remember to mail them back. To me the split has zero impact on my perception of the value of the streaming service. I looked at Amazon about 6 months ago, and there was no content of interest there that was not also on Netflix.
Aron 15y ago
I've been following Netflix for years and 'Focus' is Hastings' singular theme. They dodged cloning Hulu, Redbox, Youtube, various 5$\movie rental options, GameFly, etc. They ruthlessly cut out things like Friends features, used DVD sales. I'm surprised the reaction here is so negative. Working for large companies the theme is usually waste, and inept decision making. This is a result of the size of the decision apparatus. I would think a lot of people here are fleeing that kind of a work environment or are at least aware of it. Wearing a customer hat this sucks in the short-term, but perhaps pays off in the long-term if the internal decisions made are substantially sharper. Now you don't have meetings where people are wondering why stupid decision X was made, and the answer comes back 'because of this Y interaction with our legacy mail service' which has no long-term role to play. It's hard to see from afar the complexity of the decisions that goes on at Netflix HQ every day. I don't think that's going to be appreciated when people are wearing their customer hats. Clearly, the short-term customer perspective is poor.
- wpietri 15y ago
  The problem I have with it is that it suggests a shift from customer focus to internal focus. That's certainly how they talk about it, and it's another kind of large-company error. The happiest face I can put on this is that they've decided to focus on a specific kind of customer (the undemanding kind who will take whatever turns up on streaming) and kiss off the more discerning sort (who really valued the breadth of catalog, and didn't care as much about the medium). Which may or may not be a good business decision, but it's unsurprising that those customers are pretty cranky about it.
waterlesscloud 15y ago
Not one of my friends has had a positive reaction to this. Not one. A large percentage of them are expressing very negative reactions. Anecdotal, but I suspect this will be the least popular move the company ever makes.
Jun8 15y ago
I don't quite understand this either/or "let's focus on the big thing" approach. I think most everybody agrees that the streaming business is growing much quicker and is the future. But as others have noted, the businesses are not independent from a user perspective, they form a synergy. For example, when Motorola split into mobile/home and public safety/enterprise divisions, this made quite a bit of sense (and they were desperate anyway) because there was little overlap between those. To a lesser extent you can understand HPs spinning off the PC business to focus on printers, but in this case, although the underlying delivery mechanisms and business cases are very different both are DVDs! Think of companies going the other way, consolidating information to create user synergy, i.e. Google adding tweets to search results.

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.
- majikrooster 15y ago
  He must of done a much better job getting the employees to drink the kool aid then the customers
  - ABCD_FUFU 15y ago
    Its probably just a marketing drone. The level of clueless ness at netflix is astounding. How about the we'll get rid of reviewers that are 40 times better than our clueless recommendation system and replace them at a future date with the getsapo facebook? Whats that you say gestapo facebook is illegal? Oh well we didnt want your opinions anyway. We replaced the customer with a robot.
  - cyberguppy 15y ago
    Must...of? http://www.urbandictionary.com/define.php?term=Must+Of http://www.urbandictionary.com/define.php?term=Must+Of
- MatthewPhillips 15y ago
  You can do exactly that without rebranding the product. They're called divisions. Give each one a CEO, but to the customer they should all be Netflix.
  - fluidcruft 15y ago
    But divisions can't go bankrupt and die as easily. Qwickster or whatever it is has a death sentence. It's value wull be polished just enough to sell it off to suckers. And when it dies Netflix will just shrug.
- Triumvark 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. 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. Which should I pick? Before Netflix, I satisfied my tastes at the independent video stores around town. Netflix killed those. Naturally, I'm sensitive to any changes that might undermine the DVD service. The best solution, as I'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.

foobarbazoo 15y ago

From the customer's perspective, they are not two separate businesses. They are one, strong business (well, were). Streaming is most valuable when DVD is (a) there as a backup, and (b) managed with the same system. Netflix has seriously decreased the value of their streaming offering by separating out the DVD and de-integrating their systems. There is basically no reason to pay for Kwikster now (terrible name BTW), and the streaming is now an extra cost. We'll have our kids use Amazon Prime, which we already pay for. They're much less choosy for content anyway, and it cuts off another monthly bill. Someone inside of Netflix should have had the balls to tell your CEO this was a stupid idea and customers would hate it.

sudonim 15y ago
You don't speak for all Netflix customers when you offer your perspective. I joined Netflix because of streaming and I prefer to look at streaming only. When I joined netflix I got a DVD and didn't return it for a year. I didn't want to return it because I didn't want to get another DVD. In search results I never wanted to see the DVD results. I wanted to see what I could watch now. Content is such a key part of this. If the streaming service had the same or more content than the DVD business, nobody would care. But since they are still building that collection and struggling with content owners, people are freaking out. Time will tell whether this was a stupid idea for the market at large. As a streaming customer, I'm indifferent. As a tech pundit, I think it was an important strategic move and I applaud Netflix.
- CWuestefeld 15y ago
  I think you're throwing out the baby with the bathwater. There are straightforward technical solutions they could implement to address your complaints, but for those of us that aren't so extreme, there's no easy solution to the way they're breaking our desired usage.
ams6110 15y ago
I am a Netflix customer. I don't care what they do with their DVD collection. The only reason I occasionally ordered a DVD is because it was available in my subscription. Since the split, I've canceled my DVD service. I hate DVDs. I don't want to wait for them, I don't want to handle them, I don't want to remember to mail them back. To me the split has zero impact on my perception of the value of the streaming service. I looked at Amazon about 6 months ago, and there was no content of interest there that was not also on Netflix.

Aron 15y ago

I've been following Netflix for years and 'Focus' is Hastings' singular theme. They dodged cloning Hulu, Redbox, Youtube, various 5$\movie rental options, GameFly, etc. They ruthlessly cut out things like Friends features, used DVD sales. I'm surprised the reaction here is so negative. Working for large companies the theme is usually waste, and inept decision making. This is a result of the size of the decision apparatus. I would think a lot of people here are fleeing that kind of a work environment or are at least aware of it. Wearing a customer hat this sucks in the short-term, but perhaps pays off in the long-term if the internal decisions made are substantially sharper. Now you don't have meetings where people are wondering why stupid decision X was made, and the answer comes back 'because of this Y interaction with our legacy mail service' which has no long-term role to play. It's hard to see from afar the complexity of the decisions that goes on at Netflix HQ every day. I don't think that's going to be appreciated when people are wearing their customer hats. Clearly, the short-term customer perspective is poor.

wpietri 15y ago
The problem I have with it is that it suggests a shift from customer focus to internal focus. That's certainly how they talk about it, and it's another kind of large-company error. The happiest face I can put on this is that they've decided to focus on a specific kind of customer (the undemanding kind who will take whatever turns up on streaming) and kiss off the more discerning sort (who really valued the breadth of catalog, and didn't care as much about the medium). Which may or may not be a good business decision, but it's unsurprising that those customers are pretty cranky about it.

waterlesscloud 15y ago

Not one of my friends has had a positive reaction to this. Not one. A large percentage of them are expressing very negative reactions. Anecdotal, but I suspect this will be the least popular move the company ever makes.

Jun8 15y ago

I don't quite understand this either/or "let's focus on the big thing" approach. I think most everybody agrees that the streaming business is growing much quicker and is the future. But as others have noted, the businesses are not independent from a user perspective, they form a synergy. For example, when Motorola split into mobile/home and public safety/enterprise divisions, this made quite a bit of sense (and they were desperate anyway) because there was little overlap between those. To a lesser extent you can understand HPs spinning off the PC business to focus on printers, but in this case, although the underlying delivery mechanisms and business cases are very different both are DVDs! Think of companies going the other way, consolidating information to create user synergy, i.e. Google adding tweets to search results.