In the wake of the news that Netflix is splitting off into two companies (Netflix and Qwikster), Moviefone answers every possible question you have about what’s next for the online giant.
Q: What’s a Qwikster?
A: Qwikster is Netflix’s new DVD-only business — what Netflix used to be before it started selling streaming video subscriptions. If the name evokes Napster, Friendster or other no-longer-cutting-edge Internet brands, well, maybe that’s not an accident.
Q: Why did Netflix split its businesses?
A: Netflix sees streaming video as the future and the DVD-mailing business as a dinosaur. (So does most of Hollywood and Wall Street, for that matter.) Within a couple years, the company expects the DVD side, with its massive storage and shipping costs, to become more expensive to operate than it’s worth. At the same time, it’s not ready to write off tens of millions of subscribers who prefer access to the company’s vast and comprehensive DVD library over access to what’s still a shallow pool of streaming content.
Q: Is this why Netflix started charging separate fees this summer for both kinds of subscriptions?
A: Yes. Of course, many customers revolted over seeing their monthly bills go from $ 8.99 to $ 15.99 and canceled their memberships. The stock price took a big hit, too. So CEO Reed Hastings probably felt he had little choice but to announce the split, which he did in an apology that was e-mailed to subscribers and posted on Netflix’s blog late Sunday night.
Q: Wait, he apologized to customers?
A: Yes, for imposing the shift on customers without treating them with “respect and humility.”
Q: So, does that apology mean the membership price will go back to what it was?
A: Hahaha. No.
Q: Doesn’t seem like much of an apology, then.
A: Well, Hastings issued a second apology on video, apparently shot as he was lounging by the pool.
Q: Wow, could a poolside apology to the little people who made his fortune be any more condescending or tone deaf?
A: Probably not.
Q: Are the hilarious tweets at NetflixGlobalPR further evidence of a bungled public relations effort?
A: Heh. No, that Twitter accound is a parody.
Q: So, if I still want both DVD and streaming, I’ll have to have accounts ad both Netflix and Qwikster?
A: Yes. They’ll appear as separate charges on your credit card bill, and you’ll have to maintain separate billing profiles on both Netflix.com and Qwikster.com. But you can keep one unique user ID and password.
Q: Will the sites share my queue, my movie preferences and recommendations and my rental history?
A: No. You’ll have to start from scratch on Qwikster.
Q: Will Qwikster maintain its diverse library of videos, including the hard-to-find indie films that don’t play at my local theater?
A: Not according to indieWIRE, which says it’s hearing from indie filmmakers that the company is not renewing their deals.
Q: Jeez. Is there any advantage that a Qwikster membership has over an old-fashioned Netflix DVD membership?
A: If you want to pay for an upgrade, you can rent video games from Qwikster as well.
Q: Does it seem like Netflix rushed into this decision after dealing with this summer’s huge backlash?
A: Kind of. After all, the company apparently didn’t bother to check if Qwikster was an available Twitter handle.
Q: Was it?
A: No, it belongs to a guy whose NSFW Twitter feed was marked by an avatar of Elmo smoking a joint. (Since the weekend, he’s acquired about 10,000 more Twitter followers and a more innocuous profile picture, a coat of arms.)
Q: What’s been the reaction to the Qwikster announcement?
A: Well, about 30 percent of Netflix users are seriously considering dropping their membership. Netflix stock, which was trading just below $ 300 a share in July before the subscription price hike, had declined to about $ 156 at the beginning of this week and closed at $ 128.50 on Wednesday. At least 26,000 commenters have responded, largely negatively, to Hastings’ blog post.
Q: Is there anyone who thinks this is a good idea?
A: Tech writer Dan Frommer lists 10 reasons why he thinks the split makes sense. Wired’s Eliot Van Buskirk notes that the streaming video business is really just the streaming video rights licensing business, and he argues that splitting that off from the DVD business should give Netflix more negotiating power with the studios. Los Angeles Times movie columnist Patrick Goldstein agrees that DVDs are dying. And on Wednesday, Discovery Communications announced it was making more episodes of Discovery Channel, TLC and Animal Planet shows available on Netflix. So there’s at least one content provider who likes the new arrangement. You may not be able to stream a movie like ‘Lars and the Real Girl,’ but you will be able to catch more of ‘Say Yes to the Dress.’
Q: Who is poised to profit most from Netflix’s apparent stumble?
A: The same survey that says Netflix may lose 30 percent of its subscribers adds that many of those alienated customers will try the ubiquitous Redbox kiosks instead, where you can rent for as little as $ 1 per DVD ($ 1.50 for Blu-ray), but where titles as generally limited to the most popular recent releases. And Blockbuster is about to roll out a new streaming service in addition to its DVD-by-mail subscriptions. Blockbuster now belongs to Dish Network, which has its own on-demand service and deals with content providers, so you do the math.
Q: What other options do I have for DVD rentals and streaming movies?
A: Amazon rents streaming movies either for a yearly subscription fee or priced for individual rental, though it has a much smaller library than Netflix. Apple’s iTunes, which also has a limited library, also lets you pay per title. Hulu sells monthly memberships that allow access to lots of current TV titles and a handful of movies. Wal-Mart’s Vudu service allows you to rent or buy individual titles. As with Netflix, there’s a variety of set-top boxes and video game consoles that allow you to stream Internet video to your TV.
Q: Is there a good comic-strip-style explanation of this whole mess?
A: Yes, at The Oatmeal. (Some NSFW language.)
Follow Gary Susman on Twitter @garysusman.
Photos courtesy of Netflix