Monday, September 19, 2011

Netflix spawns "Qwikster" and adds Video Game service

Current Netflix subscribers have recently received a message from Reed Hastings (Co-Founder and CEO, Netflix) that begins with the somber words "I messed up. I owe you an explanation." 

In the message, Hastings goes on to explain the rationale behind the now infamous Netflix price hike and drops yet another bomb on subscribers - "we will rename our DVD by mail service to 'Qwikster.'"

His message ends with a final statement, "Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions."

The Neflix giant was built on being the most convenient way to access movies and content - either by streaming or by delivery. By splitting into two services, with two separate accounts and two separate billing statements, that convenience has the potential to be compromised. As disgruntled user Jeremiah Cohick explains, "By separating and charging more for access, you're wildly less valuable to me [and] I'll likely cancel."

While this provokes some frustration from subscribers who use both streaming and delivery, Qwikster will receive additional value through a new "video games upgrade option, similar to our upgrade option for Blu-ray." This upgrade will allow for Wii, Xbox360 and PS3 games to be delivered in a similar fashion to the traditional disc service, a change that Qwikster's dedicated "DVD by mail" team will be able to facilitate, according to Hastings.

The video game rental upgrade seems like a good way to steal some business from game rental company GameFly, but it remains to be seen how Netflix will implement this service and how prices compare to GameFly's $15.95 per month for 1 game out at a time.

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