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Netflix divides and conquers

September 29th, 2011

On Monday, Sept. 19, Netflix customers woke up to a personalized email that may have changed the company forever. “I messed up. I owe everyone an explanation,” were the opening words written by Netflix CEO Reed Hastings.

Last July, the company announced their 60 percent price increase which proved upsetting to loyal customers. The company also introduced two other options to their membership: the DVD by mail only, and streaming only, individually priced at $7.99. This was in addition to their $9.99 price for both. Still, this left options.

Sara Stashower, a communications professor, was one of the customers to receive a letter.

“The tone and manner [Hastings] chose just didn’t fly,” she said. “After I read it, I just had more questions, when I should have had answers,” Stashower said.

This mistake made by the CEO resulted in Netflix splitting into two completely different companies. No longer will Netflix customers receive one of three options as easily as before.

If customers want to stream movies from online, they have to use Netflix, but if a customer wants a DVD by mail, they must use the new service, Qwikster.

This means there are two separate websites and two separate billing systems. Though the prices have not changed from the recent increase, it does make it less convenient for those who want both services.

According to Hastings,  the name Qwikster was chosen to reference fast delivery.

For someone who has been writing press releases for years, Stashower did not believe that the letter was written to its full potential.

Considering it did not address why the decision was made, the exact date and time that this change will be made, and most importantly, according to Stashower, it did not reference the companies mission that the customer comes first.

Had Netflix done more research, they also would have noticed that @Qwikster was already taken on Twitter. Jason Castillo is the owner of that Twitter account whose picture is of “Sesame Street” character Elmo smoking marijuana.

Castillo seems to primarily tweet about women and smoking weed. The amount of followers grew quickly, as Netflix customers assumed it was the real company, only to be disappointed at the realization of who they were following.

Hastings rebutts the assumed bitterness of the customers by saying the separation will make each company better, since each will now have only one focus. For example, for avid videogamers, the new Qwikster will be launching videogames for Wii, PlayStation 3 and Xbox 360 to rent via mail.

Though the questioned arised quickly after the e-mail was sent out if places like Gamefly, a video game rental company, will be threatened by this new option of videogames. Qwikster’s new option does not seem to be a threat since Gamefly has expanded throughout the years and offers over 8,000 games for 10 different console and handheld systems.

When the unlimited streaming was launched last year, instead of communicating with customers, it went ahead and assumed DVDs would be something of the past, making them a $2 add on.

Quickly the company realized DVDs have not lost their popularity, and that is what initiated the separation of DVD by mail and streaming.

Senior Lauren Grys thinks that her family will still be users of the new company. “My parents use Netflix, and probably aren’t aware of the changes yet. I think that demographic will continue to use the DVD home service.”

Andy Rendich, who was running Netflix’s now extinct DVD service for the past 12 years, will be the new CEO of Qwikster. He and Hastings will announce the official release of the separated companies when they decide the exact date.

“I imagine we will keep the Qwikster DVD delivery, much as I stumble over that name,” Stashower said. “It’s possible we’ll keep the streaming, too, but I’m not inclined. No real improvement in content or ease of delivery.”

Other JCU Netflix users may not be so forgiving. “I’m not cool with paying two prices,” said junior Katie Largent. “I’ll probably end up canceling one of the services.”

Some online bloggers have mentioned that those who do see this split as problematic are not understanding that these two different services are seen as apples and oranges. They see it as the fact that the two companies now have one parent company is just a way to stick to perfecting one thing.