Netflix Splits DVD And Streaming Businesses • Hacker News Board

Re: Netflix Splits DVD And Streaming Businesses

#151

Post by Jun8 » Mon, Sep 19, 2011, 3:47 PM UTC

arithmetic wrote: post #82

omarchowdhury wrote: post #61

Earlier quoted context omitted.

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 unde…

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…

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.

Re: Netflix Splits DVD And Streaming Businesses

#152

Post by wpietri » Mon, Sep 19, 2011, 3:51 PM UTC

Aron wrote: post #138

arithmetic wrote: post #82

Earlier quoted context omitted.

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…

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 appar…

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.

Re: Netflix Splits DVD And Streaming Businesses

#153

Post by ams6110 » Mon, Sep 19, 2011, 3:52 PM UTC

foobarbazoo wrote: post #90

arithmetic wrote: post #82

Earlier quoted context omitted.

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…

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), a…

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.

Re: Netflix Splits DVD And Streaming Businesses

#154

Post by asr » Mon, Sep 19, 2011, 4:04 PM UTC

bostonpete wrote: post #144

jonknee wrote: post #118

Earlier quoted context omitted.

How does splitting them up make them each phenomenally better? Why should the customer care about Netflix's internal organization? Make the same changes, just keep the top level name and details like accounts/recommendations. If I buy a Macbook Pro it's from Apple and if I rent a movie from the iTunes store it's from Apple... They are completely different business units internally, but to the customer it's the same c…

One theory, discussed by Bill Gurley in the post below, is that it'll put them in a better negotiating position with the studios, who were trying to get a percentage of Netflix revenues (not just the streaming revenue)... http://abovethecrowd.com/2011/09/18/understanding-why-netfli...

This has the ring of truth--otherwise, why not just better separate the divisions within the Netflix brand, as many (angry) commentors have suggested?

An additional possibility that occurs to me is that the movie studios' well-publicized dislike and fear of the streaming business is hurting the physical DVD business. Netflix has had to accept some pretty bad terms from studios, like delaying their availability of new releases, in part because studios see Netflix as a long-term threat. Quickster, on the other hand, should be able to build better relationships with studios precisely because they're not a threat to the studios' long-term dominance.

Basically, it's true that this is not the most customer-friendly move in the short-term, but the movie studios' strategy in the medium-term was to kill Netflix. "Continue to grow in the same direction" was not an option because the studios hated it, and this way both pieces of Netflix have at least a chance to survive.

Re: Netflix Splits DVD And Streaming Businesses

#155

Post by burgerbrain » Mon, Sep 19, 2011, 4:11 PM UTC

perucoder wrote: post #117

frossie wrote: post #80

Earlier quoted context omitted.

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 Netfli…

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.

Amazon's streaming movies work great in linux. Even better than youtube fullscreened.

Re: Netflix Splits DVD And Streaming Businesses

#156

Post by hdctambien » Mon, Sep 19, 2011, 4:13 PM UTC

Triumvark wrote: post #110

arithmetic wrote: post #87

Earlier quoted context omitted.

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,…

> 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…

Did Netflix kill independent video stores? Or did Blockbuster kill them?

Re: Netflix Splits DVD And Streaming Businesses

#157

Post by tjr » Mon, Sep 19, 2011, 4:14 PM UTC

ams6110 wrote: post #153

foobarbazoo wrote: post #90

Earlier quoted context omitted.

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), a…

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 servic…

I am also a Netflix customer. I too canceled my DVD service. I haven't ordered a DVD from Netflix for months.

I had previously thought that if I ever did want to order a DVD again (for something not available on streaming), I could just reinstate the DVD service and order it. Now, it appears, I would have to sign up with a totally different system to get the DVDs. I'm probably not going to bother doing that.

I am baffled as to why they would split the DVDs into a different business altogether. It's a different product, sure, but need it be a whole separate business? I trust it makes sense internally to Netflix, and I presume it is projected to be more profitable. And if so, then I can hardly blame them for doing it. But as a user, I don't get it.

Re: Netflix Splits DVD And Streaming Businesses

#158

Post by sammyo » Mon, Sep 19, 2011, 4:21 PM UTC

arithmetic wrote: post #83

foobarbazoo wrote: post #62

Qwikster is a terrible name, and this is a terrible move. Hastings is now in competition with that guy running HP to see who can destroy their company first. Maybe Ballmer will get in the game and spin off Windows/Office from Microsoft, and rebrand them "Facetown", while proclaiming Bing to be the future of the company. Unbelievable. Update: I predict Qwikster is dead and buried within 5 years, and someone else pushe…

Netflix employee here. I've been reading all the comments here and at Reed's blog to understand what everyone has to say about the split. Internally, we've known about the split for some time now. Why do you think this is a terrible move? Your comment has a lot of unflattering comparisons, but doesn't explain why the move is stupid. Also, you're probably right that DVD as a service will not last forever, and Reed und…

From the outside it appears that Netflix is reacting late to market forces and business partners. Netflix had seemed to be growing in size and more importantly 'clout'. The 'media biz' is run on relationships, trading huge favors and controlling vertical markets. If Netflix has little influence or trading tokens then it will eventually be marginalized. Blockbuster seemed to be just just what it's title implies for a while, now it seems more like a blip.

Re: Netflix Splits DVD And Streaming Businesses

#159

Post by bradleyland » Mon, Sep 19, 2011, 4:21 PM UTC

encoderer wrote: post #136

bradleyland wrote: post #132

Earlier quoted context omitted.

That air gap is being created by Netflix. Why would they separate the sites and businesses so distinctly if their intention weren't to create an air gap?

Because they have fundamentally different cost structures, and each will benefit from a dedicated CEO who is accountable for results and responsible for strategy? You really think that the respective sites will have no integration? Not a single-sign-on user account? Not an "Available on Netflix" link? Why? It makes business sense for both units and it doesn't impede any of the objectives of the spinoff.

I agree with what you that it makes sense, but the message Netflix is delivering tells me that Netflix is headed in the opposite direction of what makes sense.

Re: Netflix Splits DVD And Streaming Businesses

#160

Post by mirkules » Mon, Sep 19, 2011, 4:25 PM UTC

wmf wrote: post #23

whichdan wrote: post #2

I wonder what Netflix will show for search results that are only available on Qwikster.

Probably nothing; they've been removing that kind of functionality (e.g. add to DVD queue from the streaming UI) for a while.

I remember that when a movie became available for streaming if it was in your DVD queue, you would get notified in the UI. I don't know if that is true anymore?