We don’t usually cover non-Apple related news here on iDB, but this recent announcement from Netflix was too big to pass up. Netflix CEO Reed Hastings has publicly apologized for the way that the company handled its recent pricing restructures for streaming/DVD rentals, and has announced a total division of Netflix’s DVD and streaming divisions.

Many customers were outraged that Netflix essentially screwed subscribers of the DVD rental + streaming plan by raising prices, and Netflix has since rethought its approach to content distribution. The DVD rental service that made Netflix famous will be spinned off as “Qwikster,” while Netflix will be used for online streaming only…

“We realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to “Qwikster”.

We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.”

Netflix and Qwikster are now two completely different entities. One major downside to this restructure is that users will need to have two logins for two different websites. Netflix.com will remain as is and only offer streamed movies and TV shows. Qwikster will be a new website with a separate billing process and login for DVD rentals.

“There are no pricing changes (we’re done with that!). Members who subscribe to both services will have two entries on their credit card statements, one for Qwikster and one for Netflix. The total will be the same as the current charges.”

This is perhaps one of the boldest things that Netflix has done as a company, and it shoves a clear stake in the ground that points towards the company’s direction moving forward. By totally separating DVD rentals from online streaming, Netflix is able to keep Qwikster self-contained to slowly die off on its own. Let’s face it: streaming is the future.

Netflix realizes that users want to have instant access to content from any device, whether it be from an iPhone, iPad, or Apple TV. Hollywood licensing conflicts currently limit Netflix from having access to first-rate movies and TV shows on the day of release, and many popular titles are not available to stream. In the next couple of years, those licensing conflicts will hopefully be resolved. But until then, customers will surely be enraged.

Here’s a video explanation from Netflix CEO Reed Hastings:

What do you think about this latest move by Netflix? Are you upset about the separate DVD rentals? Do you see this as a smart business decision on Netflix’s part? Let us know your thoughts in the comments.

  • Dane

    I had Netflix. I always looked at it as a DVD rental service w free streaming tacked on. When they separated the 2 and started charging more I completely cancelled.

    The instant stream library is all very old content and a lot of tv shows. I signed up to see new release movies. Since they don’t get most movies for 28 days and charge extra for blu ray I switched over to blockbuster.

  • GoblGobl

    Are they going to automatically migrate my DVD list and account information to Qwickster or give me the finger and make me start from scratch?

    • I assume they will migrate everything for you. It’d be a shitty move if they made you start from scratch.

  • Dane

    Just watched the video. Netflix CEO seems like a homosexual. This video just shows how disconnected he is from his customers. I understand streaming is the way of the future and it has it’s benefits but when almost every single good movie is DVD only why bother.

    As for the qwikster, it doesn’t really seem like it’s making any improvements. They’re adding games but he said at an extra charge. Blockbuster already sends games and blurays through the mail at no extra charge plus unlimited in store exchanges.

    I think blockbuster is trying to make the DVD service a separate entity so they can eventually sell it off.

    • Dane

      I meant Netflix* in the last paragraph. Go take a look at qwikster on twitter. Lol

    • Elie

      Your homophobic remark is out of place here.

    • TT

      Dane seems like a bigot.

      I still fail to understand why someone’s sexual orientation means anything at all aside from what sex someone is attracted to.

  • fdxgncgfn

    All the movies are only available with the DVD thing. So far, I haven’t found a single major movie that I’ve wanted to watch in the streaming service.

  • Good to see some non-Apple related news here from time to time. Even though it has nothing to do with Apple, this is pretty big tech news. Anyways.

    I am still very angry at the way Netflix treated me and a few other million customers. I had been a loyal Netflix customer for years, and I never missed an occasion to tell about their service to my friends who hadn’t subscribed yet.

    When they decided to rank up the price by 60% on me, I was shocked, and extremely disappointed. Of course, I rages about it on Twitter, where a few naive people call me (and others) cheap for bitching about the small price increase.

    It’s not about price. Definitely not amount money. It’s about respect, and consideration for people who have helped make Netflix what it is today. At the end of the day, I don’t care about a $6 raise, I just feel let down by a company that doesn’t seem to value my business.

    I’m a big believer in brands (heck, I even wrote a freaking thesis called “the importance of brands”) and always am a great advocate for those brands that know how to treat their customers right. Netflix doesn’t. They took a dump on millions of customers, and of course took a big hit as the stock fell about 50% in just 3 months.

    So I canceled my DVD plan. We watch 1-2 DVDs a month, and for that price, I can easily go to the Red Box which is literally 200 yards away from my house. My wife didn’t want to cancel streaming so I gave her an ultimatum. If she’s not going to watch 2 streamed movies a month, I’m going to cancel that too. The selection is definitely not worth $9.

    Ahhhhhhhh I now feel better. Venting, moaning and bitching always makes me feel good 🙂

  • Andrew

    This is the kick I needed to cancel the DVD to home part of my account. I had the 3 at a time plan, but with the new pricing, changed to the 2 at a time plan, because I just don’t use it that much any more. But this is what I needed to completely cancel.

    It’s clear that they are trying to get a clean break from the inevitable collapse of the DVD to home model. They are trying to preserve the Netflix name, and when Qwikster inevitably fails, probably even sooner than they are predicting, they can throw their hands up and say “oh well, guess no one wants DVDs shipped to home anymore, who knew!” and still have “Netflix” in tact as a streaming service, theoretically unscathed.

    I’m sure “Netflix” will start to add “rental” options in addition to it’s “one price for all you can consume streaming” model that they have now. You’ll be able to rent movies to stream, probably also be able to buy them as well, and they will probably even have brand new releases in this category. It could work well, for them and for us, if the prices are fair, but if they are the same or close to the same price as on demand from my cable provider, they can forget it. Even if it’s successful, it will be hard for them not to get greedy, and suddenly you’re all inclusive streaming pass for a low price doesn’t include much, the price goes up, and the content it includes sucks and all the good content you need to “rent.” It’s at this piont that they will see their downfall. Let’s hope that doesn’t happen. I can envision it happening something like that though. You get on a plan that is no longer unlimited, but is something like a “20 movie a month” plan, and you must pay more for more, and you still need to pay more just to rent the best/newest content. Or maybe it’s a “5 new movies a month, the rest unlimited” plan for like $30/month. Who knows. It will be interesting to see where they head. The one thing that is clear is that this is the beginning of the end for DVDs being shipping to home.

  • Justin

    I don’t think of Netflix as streaming, I think of it as that little red envelope coming in the mail. However much I didn’t like the move of pricing things separately, it worked, at least on me. I was forced to choose between the DVD’s only or the streaming only, and it’s obvious streaming is much easier and more convenient. I’m not happy with the selection but there are some “ok” movies in there if you look hard enough. I just hope they come through with their promise and offer up some better content or the point of having Netflix is completely moot.

  • Massie

    I can’t believe this is even a real video…are they in the food court?? It’s like he’s making it up as he goes…

  • Joe

    Netflix came to Canada last October and in streaming only. 7$ a month here. There are not many recent movies but I have noticed a few that were made in the last year that came up at least here in Canada. I’m not sure what the content is like in the US but I would watch about 30% of the content on Netflix which is about the same as a video store catalog or tv programing. I like the service we get here and the fact that most recent movies and shows are in HD puts real value my monthly fee.

  • 1st if all- I’m still pi$$ed bout the price mark up!
    2ndly- “streaming is the future”. Yeah, until a storm comes and knocks the Internet out on a Friday afternoon and didn’t have Internet for like a day and a half. Like a week ago. I cudnt even airplay my Netflix to my ATV 2.
    might drop Netflix altogether and go with hulu plus. They get shows instantly.

    • Jmarsh5

      Yeah until a storm comes along and knocks out your internet and you can’t watch Hulu Plus anymore.