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Netflix Splits DVD And Streaming Businesses

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Re: Netflix Splits DVD And Streaming Businesses

#81

Post by pcj »

Something just doesn't seem right here. Netflix could have easily worked on both DVD and streaming and each team could have focused on strengthening their services without causing any inconvenience (2 separate websites and queues?) to the customers. Had this been an Merger between two companies who were in DVD and streaming business, markets would've hailed the decision (just because of the synergy).

I am sure Hastings is not naive enough to not think about these obvious things, which makes me think, how does this help them? I can't think of even one angle where splitting the companies makes sense?

Re: Netflix Splits DVD And Streaming Businesses

#82

Post by arithmetic »

omarchowdhury wrote: post #61
Jun8 wrote: post #59

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)…

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 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.

Re: Netflix Splits DVD And Streaming Businesses

#83

Post by arithmetic »

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 understands that too (he mentions this in the post as well - http://blog.netflix.com/2011/09/explanation-and-some-reflect...). DVD service may not last very long, but right now, it is a growing business.

Re: Netflix Splits DVD And Streaming Businesses

#84

Post by alphakappa »

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…

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.

Re: Netflix Splits DVD And Streaming Businesses

#85

Post by Stratoscope »

frossie wrote: post #80
Jun8 wrote: post #59

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)…

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…

> 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.

Re: Netflix Splits DVD And Streaming Businesses

#86

Post by sthatipamala »

timr wrote: post #25
bryanh wrote: post #7

In my opinion, this is definitely the obvious and correct move. It isn't a surprise that Netflix wanted to head towards a stream only business model, but this makes it crystal clear that Netflix is (at the moment) a premium streaming video company. I mean look at them, thats all they do now! The still face some big hurdles with all their streaming content deals, and the outcome will likely be what makes or breaks the…

"this makes it crystal clear that Netflix is a premium streaming video company. I mean look at them, thats all they do now!" Yeah, well...now they're providing a commodity service. Renting DVDs through the mail has/had a huge infrastructure advantage for the established player. Streaming video over the internet? There are dozens of sites that do it well. The technical advantage is far less sustainable, because it isn…

Delivering streaming media content has some infrastructure costs as well. Bandwidth is not free (it will get worse if Net-neutrality dies) and one also needs to have a CDN to effectively deliver content to different geographies.

Re: Netflix Splits DVD And Streaming Businesses

#87

Post by arithmetic »

alphakappa wrote: post #84
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…

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.

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.

Re: Netflix Splits DVD And Streaming Businesses

#88

Post by encoderer »

I posted this on their blog before I saw the thread here:

Remember the quote by Henry Ford? It went more or less like: "If I asked customers what they wanted, they'd have told me a faster horse." The truth is, all the customers here -- myself included -- are probably the least qualified people to say this is a bad idea.

I do think that some communication between the 2 sites is important. But it's not as if that's off the table. Once they get around to developing it, it won't be hard to have an "Available On Netflix" link beside entries on your Qwikster queue. In fact, doing so would be effective cross-promotion.

The truth to me seems to be this: These really are very different businesses. And it's true streaming is the future. I expect Blu Ray to be the last optical disc player people ever buy. From there on, it's all streaming.

A future we could've faced is one where Netflix devotes more and more resources to streaming license fees and data centers, they close regional netflix warehouses, dvd delivery goes back to 2+ days instead of the 1 day it currently is for most the US population. In general, the DVD service is choked of leadership talent within the company and capital improvements.

Now, there's a CEO of DVD's by mail. A man who has full budgetary powers over just the DVD business. A business NFLX KNOWS how to run profitably and repeatably. It's a franchise. They've got that stuff DOWN.

I'm not an apologist. I currently opted to pay for both services and I'm not happy about the price increase. But, I'll wait and see. In 6-12 months, if we don't see some big improvements in stream selection, I'll probably chose to cancel that side of my account, and use Hulu Plus and Amazon instead. But for now, I respect the hard decisions businesses make when they see the need to pivot.

Re: Netflix Splits DVD And Streaming Businesses

#89

Post by encoderer »

Jun8 wrote: post #59

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)…

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?

Re: Netflix Splits DVD And Streaming Businesses

#90

Post by foobarbazoo »

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…

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.

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