Wednesday, September 21, 2011

Netflix, Qwikster and the Dumpster

RT @FakeAPStylebook: "The past tense of 'Netflix' is 'Netflucked.'"

33 1/3 LP vinyl records. 45 RPM singles. Cassette tapes. CDs. VHS tapes. DVDs. Blu-ray Discs. Except for the very last one, I made my way through each of the earlier generations of physical media for music and movies. Until now.

After the jump, how Netflix's latest move marks a milestone in the entertainment delivery industry, a milestone like none of the ones that went before.

If you haven't heard, Netflix announced a few months ago that they were separating their DVDs-by-mail service from their Internet streaming service. They introduced separate pricing for the two services, and, of course, significantly raised the price for those who subscribe to both. Most of the public reaction was negative, mainly because of the price hike.

This week, Netflix took the next step, splitting the businesses behind the two services. The streaming video service will continue to be called Netflix. Henceforth, the DVDs-by-mail business will be called Qwikster. Again, most of the public reaction has been negative, mainly because Netflix/Qwikster didn't rescind the recent price increases.

Netflix can be faulted for poor PR in how they announced this change in their business model, but not for the change itself. The DVDs-by-mail business is doomed, like the DVDs-in-store business model doomed Blockbuster before it and similar business models doomed record stores and book stores, too. One way or another, Netflix is going to be out of the DVDs-by-mail business. Qwikster is a sop tossed to its customers who refuse to join the migration to the Internet. Their numbers will inevitably decline with or without this move by Netflix. Expect Qwikster to fade away, much like Blockbuster did. Netflix might as well have named their spin-off business Dumpster ... or Netflucked. Meanwhile, Netflix's video streaming business is free to focus on a different customer and different business model, completely free of the ball and chain of the DVDs-by-mail business model.

The only remaining question is whether Netflix is going to be out of business altogether or whether they can still salvage something. That something is video streaming. Streaming is also offered by Amazon, Apple, Google, Microsoft, and every cable and satellite television service provider. Netflix may be in a fight for survival, but it's in the right boxing ring, the one that matters. Being a contender in the market of the future is better than being the champion in a dying market.

Personally, I'll be sending Netflix less money each month as I drop my DVDs-by-mail service. It's this step that deserves special notice. Closing my door on physical media is a significant milestone in the history of media. It's a step I took first with music (I use Rhapsody to gain Internet access to more music than I can possibly listen to, even once). Then, because of the availability of newspapers and magazines online, I gradually let all my paper subscriptions expire. More recently, I quit buying dead tree books (Kindle is the enabler of this). Lastly, it's movies' turn. I'll be solely streaming movies from now on. I expect I'll look back on stuffing and mailing those red envelopes with DVDs as being as quaint and obsolete as browsing the stacks at record stores.

Good luck, Netflix. There's no guarantee you'll survive the transition, but it's certain you'd be as doomed as those record stores were, if you didn't try.

1 comment:

Mark Steger said...

And now, today, Netflix said, in effect, "never mind." Goodbye, Qwikster, we hardly knew ye.