Home » News » Netflix quick to nix Qwikster service

Netflix quick to nix Qwikster service

Courtesy of MCT

The once-mighty Netflix has abandoned its own proposal to separate its DVD-by-mail service and its streaming content.

The change in heart comes just three weeks after the plan was disclosed to the public.

Reed Hastings, chief executive for Netflix, said having two different services, Netflix by mail and Qwikster streaming online, would be too difficult for customers. He said the market craves simplicity.

“We are going to keep Netflix as one place to go for streaming and DVDs,” Hastings wrote in a blog post. “This means no change: one website, one account, one password … in other words, no Qwikster.”

The plan was to have subscribers pay for the DVD-by-mail service — Netflix — and to also pay for the new online-streaming feature, Qwikster. The plan to form Qwikster was announced on Netflix’s blog on Sept. 18.

Laura Ashley, a second-year in exploration, said she only uses the instant portion of Netflix, and would have used Qwikster because of all the content the online streaming content offers. Ashley said her sister uses the DVD-by-mail feature.

“I only use Netflix for the instant watch,” Ashley said. “Honestly for the price (I’m) paying, it is still a really good deal.”

Many customers were disgruntled about the announcement of the price change on July 13, when Netflix raised its price by nearly 60 percent the original cost. Hastings wrote in his blog that there would be no more price changes.

“While the July price change was necessary, we are now done with price changes,” Hastings wrote in his blog.

Anthony J. DiClemente, an analyst for Barclays Capital, said between the price hike and the negative publicity, the Netflix brand could take awhile to recover.

“Given the amount of negative news flow around recent company-initiated actions, including the price change, which remains in effect,” DiClemente wrote in a report Monday. “It could take some time for consumers to come back to Netflix.”

On July 13, Netflix announced that the price for the basic package — one DVD at-a-time and unlimited streaming — would rise from $9.99 to $15.98. The announcement of the price hike sent the once-dominant Netflix stock plummeting.

The price change took effect on Sept. 1.

Evan Mertz, a third-year in business, said he was not happy about the change in price, but he is glad that Netflix decided to scrap the Qwikster idea.

The stock, NFLX, was at an all-time high prior to the announcement of the price change in July, sitting at around $300 a share. Now just months after the announcement, the price sits around $110 a share, and it actually hit its lowest price in a year at $103.13 a share on Tuesday. The closing stock line on Tuesday was $108.66.

Since its peak in July, Netflix has lost nearly $10 billion in market value.

With added pressure from Amazon, Hulu and Blockbuster, many analysts say the Netflix brand is in trouble.

Barton Crockett, a contributor to NPR’s Marketplace, said the back-and-forth attitude of Netflix will hurt the company’s growth.

“Consumers rejected (Qwikster,)” Crockett said. “They ridiculed it. Reed Hastings heard and he’s retreated. He’s made the right choice, which is to give up a bad idea.”

Leave a Reply

Your email address will not be published.