In a surprising move Netflix has broken off its disc-by-mail service into a separate subsidiary called Qwikster. Wait a minute? Wasn’t Netflix built on DVDs-by-mail? Not any more. Netflix has done away with discs. In a blog post last night CEO Reed Hastings apologized for the confusion but explained the move was made because Netflix’s shares have been dropping due to price increases and the splitting of services. He reasoned Netflix could do a better job at providing streaming services if it were the only focus of the company.
According to Hastings, “[his] greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming.” He also mentioned AOL and Borders as companies to look at as failures for not moving fast enough. As a result, Qwikster will focus on providing discs by mail, and Netflix will focus on offering streaming services, including worldwide expansion.
Qwikster will be a completely different service and billed separately from Netflix. As a result you’ll have to sign up and manage the service as you would a completely different company. However, an improvement to the disc-by-mail service will be the addition of movie game rentals for Wii, PlayStation 3 and Xbox 360. Unfortunately, games will be an additional charge (like Blu-ray Discs) — possibly another $2 per month.
Qwikster’s website currently just says “Launching Soon” but look closer and you’ll see there are new Qwikster-branded DVD-mailers in the image. What a way to build a great brand and destroy it with something sub-par. If you read between the lines you might gather that Qwikster is a company with an expiration date. (By the way, didn’t Napster already exhaust the “ster” trend 10 years ago?