Netflix announced Sunday night their DVD-by-mail service is being renamed as Qwikster and will be separated from their online streaming services.
“DVD and streaming were becoming more and more different, and we could do a better job for both services if we separated them,” stated Netflix CEO Reed Hastings in the video announcement.
The online streaming service will retain the title of the company (Netflix) and, according to Hastings, neither Qwikster nor Netflix will see any price increases in the immediate future.
When Qwikster initially launches, browsing histories from current Netflix accounts—along with all the recommendations therein—will be carried over, but accounts will track separately following the split.
For customers who continue to use both services, this means what is viewed through streaming will only affect the recommendations made by the streaming service and vice-versa for discs.
Hastings also announced that in addition to carrying DVDs and Blu-Rays, Qwikster will offer video game rentals, marking the company’s entry into a market that has previously seen little competition for leading video game rental service Gamefly.
“Members have been asking for video games for many years, and now that DVD by mail has its own team, we are finally getting it done,” wrote Hastings.
The announcement did not state when the split will occur, while the Qwikster.com website simply states that it is launching soon.
The announcement of Qwikster was accompanied by Hastings’ attempt to not only explain the direction Netflix is trying to move towards but also clarify why the company increased its prices in July.
“It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes,” wrote Hastings. “I messed up. I owe everyone an explanation.”
Hastings went on to explain that he and the company were attempting to find a manner in which to transition Netflix from a company whose main strength since its inception had been its DVD-by-mail service to its newfound strength in its popular streaming service.
Recently it has become clearer that while financially strong, the company also faces rising licensing costs from multiple distributors and most recently lost its contract with Starz.
Hastings’ explanation indicated that the price hikes were designed to give Netflix the financial capital to continue to augment its streaming services, specifically through the retainment of current licenses and expansion into acquiring licenses from more distributors for more films.
“By separating the services and charging for both ($7.99) we can license more streaming content,” said Hastings. “We are hungry for better streaming service.”
The announcement comes in the wake of a hard hit to Netflix, as the company lost over one million subscribers from the fallout over the price hikes.
While only time will tell whether this latest announcement will appease or further anger customers, the company is well aware of the damage already done.
“In hindsight, I slid into arrogance based upon past success,” wrote Hastings. “Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight.”
