Good news for Amazon Prime members: Amazon.com has signed a deal with Viacom that gives its Amazon Prime Instant Video service access to a lot more stuff–from Jersey Shore to Dora the Explorer. It now offers more than 15,000 streaming videos to Prime members at no additional charge.
Over at Read Write Web, Dan Frommer says that Netflix is OK with Hollywood taking actions that hurt Netflix’s DVD rental business–it wants DVD renting to go away, too:
The future of Netflix is 100% based on its ability to grow into the best streaming video entertainment service. Renting discs is very profitable for Netflix, but it’s the past. That’s why it went as far as to try separating its DVD business last year as “Qwikster,” and that’s why it’s letting studios make DVD rentals less attractive with windows and queue restrictions.
With last year’s Qwikster fiasco, we saw that Netflix is so anxious to exit DVD rentals that it hurts its judgment. It’s never healthy for a company to be in a business it dislikes. I wonder if Netflix has considered just ditching rentals–sooner, not later–rather than hoping that consumers are the ones who do the ditching?
When Netflix backtracked on its plans to spin off DVD rentals into a separate company called Qwikster, the company didn’t say whether it would still add video game rentals to its mail-order service, as announced along with the spin-off.
Now, it’s official: Netflix will not rent video games, or at least it has “no plans” to do so, CEO Reed Hastings said in an earnings call. He did not elaborate.
Netflix had planned to rent video games as an optional upgrade for movie renters. The news excited me because both GameFly and Blockbuster have trouble sending out the newest games in a timely manner. I was hoping that Netflix, with its huge DVD operation, would be able to do a better job with new releases, or at least pressure its competitors to do so.
But without a spin-off, it’s no surprise that Netflix doesn’t want to make the investment. That money is better spent on acquiring more streaming content–the inevitable future of media consumption–instead of trying to rent more discs.
Americans, as Winston Churchill famously pointed out, can be counted on to do the right thing–after exhausting all other possibilities. It’s the same deal with tech companies. The wonders they bring us are many, varied, and never-ending, but they’ve always been accompanied by an equally rich assortment of misadventures and wrongheaded ideas. The successes and failures feed off each other, propelling the entire industry forward in herky-jerky, unpredictable fashion.
It may just be me, but I can’t remember many years as peculiar as 2o11 turned out to be for this business. Even demonstrably gifted and sensible people like Netflix’s Reed Hastings seemed to fall victim to a fever that made them do strange, ill-advised things. I hope that 2012 is a tad less weird, but 2011 has been fascinating to cover, and never, ever boring.
In hallowed Technologizer tradition, it’s time to recap the year in dumb. Celebrities, corporate intrigue, sex, violence–they’re all here. Gird yourself, people: Things are about to get really stupid.
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f you received an email recently telling you that you would be receiving a Walmart gift card or cash equivalent as part of the corporation’s settlement in a class action lawsuit alleging that Walmart and Netflix illegally worked together to fix DVD rental or purchase prices, then I’m afraid there’s some bad news: It probably won’t amount to enough to rent a DVD (or buy a coffee, for that matter), and there’s no more where it came from.
Netflix has announced its third-quarter results, and one stat stands out: 800,000 customers left the service its user base shrunk by 800,000 customers overall. Netflix says the defectors were mostly folks disgruntled over its abrupt price hike back in July, not ones rattled by its short-lived plan to split off DVD rentals into a stand-alone service called Qwikster.
At some point, all the unhappy Netflix campers will leave, and I still think that the company is going to a good place with its streaming service. At the moment, though, it needs to repair its reputation. It needs to prove that it cares about its customers and isn’t going to spring any more bizarre surprises on them. It needs to show that it has an adequate degree of self-awareness. It just needs to be normal for a while.
I have a confession to make. Ever since Netflix announced its plans to spin off its discs-by-mail business into a self-contained business called Qwikster, I’ve been assuming it would reverse the decision, and have frequently checked Qwikster.com for signs it had done so. I last did it early this morning.
And now it has. In a blog post, Netflix CEO Reed Hastings announced that Netflix will stay, well, Netflix. I never stopped assuming this would be the eventual outcome, especially when the initial announcement was followed by radio silence. There was just too much that was too wrong with the idea–the fact that Netflix was eliminating one of its principal attractions as a service, the fact it did so with a video that almost seemed to brag about it, the name, the fact it didn’t have the Twitter handle. It was all the irrational result of some sort of bizarre midlife crisis, and the oddest part of all is that the idea got announced before the company came to its senses.
The controversial price hikes, however, remain in place.
Netflix is a fine company with a fine service, and–until recently–the way it’s navigated its transition from a snail-mail powered enterprise to a digital one has been really admirable. With any luck, it’ll get back to business so quickly we’ll forget this brief period of weirdness ever happened.
Marc Randolph, a former Netflix employee–he was a founder and the first CEO–has chimed in on this whole Qwikster mess. He makes a more compelling, coherent case for divvying up the company’s streaming service and disc-rental business than anything that Netflix/Qwikster has said in its own defense:
So even though I haven’t been at Netflix in a long time, I can easily imagine the growing frustration they must have felt these last few years as they made decisions they knew were suboptimal for the streaming business in order to maintain compatibility with the DVD business. How to work out pricing that covers multiple use cases. How to come up with messaging that embraces two different ways to receive movies. How to manage the significant differences in the content available between the two services. How to simplify the landing page and sign up flow.
Well no longer. Not having to worry about compatibility between the services makes it infinitely easier to optimize every decision around the real prize, which is clearly streaming. Pricing. Messaging. Content. Sign-up-flow. All better now.
Randolph doesn’t defend Netflix’s communications about the price hike, name change, and related matters: He calls them “ham-handed” and “tone-deaf.” But I wonder how well Netflix customers would be taking the news if the company’s communications had been flawless, and if it had come up with a way better name than “Qwikster.”
I don’t come away from Randolph’s piece entirely convinced of the righteousness–ham-handed, tone-deaf messaging aside–of what Netflix is doing. Or maybe I’m so convinced that I don’ think the company’s going far enough. I mean, if renting DVDs by mail is so unpleasant a business to be in, shouldn’t Netflix just sell, spin off, or shutter Qwikster? Sooner or later, it’s going to take one of those actions. Why not do it today, rather than complain about all the downsides of disc rentals and how they’re standing in the way of the streaming business?
This whole Netflix-Qwikster split had a fair number of people wondering if Reed Hastings had lost his mind. Hastings is no dummy, though, so there’s got to be some sort of method to the perceived madness.
Industry analyst Michael Pachter wrote in a note to clients the very same thing; that there’s “a method to their madness,” reports MarketWatch.
Pachter’s theory? Netflix could sell its streaming business to Amazon, a company with deep pockets that’s been aggressively trying to make inroads with its digital content offerings. It’s done well with digital books, it’s still trying to get its footing with digital music, and perhaps now we get to see how big it can go with movies and TV. And what better way to go big with streaming movies and TV than to buy the company best known for streaming?
I just attended a press conference hosted by Dish Network and its Blockbuster division, where they announced Blockbuster Movie Pass, a service with discs-by-mail (including Blu-Ray and games at no extra charge), unlimited on-demand streaming to TVs and PCs, and more–for $10 a month. Sounds like a formidable competitor to the service formerly known as Netflix, which is about to be divvied into Netflix and Qwikster. Except it turns out that Dish isn’t announcing anything aimed at consumers who have cable or who want to cut the cord–Movie Pass is for Dish subscribers (and includes twenty channels of live movie programming via satellite as well as its other stuff).
