This morning Netflix announced that its DVD-by-mail business would remain under the Netflix umbrella, instead of the Qwikster “brand” – a brand that was enthusiastically embraced by everyone on the Internet. (End sarcasm.)
The company’s reversal queued up Round Three of junior marketing professionals armchair-quarterback-tweeting CEO Reed Hastings‘ decisions, latching onto the #FAIL hashtag and calling for his dismissal. The majority of these people have never started a company or managed a large brand, and as soon as the Mashable/TechCrunch headline and retweet churn quieted down, they all immediately went back to tweeting about the Kardashians.
Reed Hastings is not an idiot, nor is he out to personally inconvenience your ability to watch movies.
It’s worth examining some of his recent decisions, though – and why he made them.
Why split Netflix in two? Understand that first and foremost Netflix is a content delivery company, not a plastic disc in your mailbox company. When the split was first announced, it actually made sense to me – at least in terms of operations and logistics. DVDs require warehouses and postage. Content streaming requires web servers. This was clearly a move to go “all in” toward a Utopian future where 100% of all content from all time is available for streaming on-demand.
Our telecommunications infrastructure doesn’t support that yet, and entertainment studios are totally uncomfortable with it, but that is the future Reed Hastings is banking on. It’s a future that absolutely will happen. The split was a bold move to speed all of this up (something Steve Jobs was really good at).
We can put Qwikster in the Museum of Internet Oddities along with Kozmo and Flooz.
A couple of problems arose with the proposed split. Many took issue with the Qwikster name. It did seem a bit odd to me, but I just filed it away as a minor annoyance. Others were upset about having to log in to two separate websites and enter billing information twice.
My main concern was the fact that my Entertainment DNA might get ripped in half. Here’s what I mean: Pandora is built upon the Music Genome concept, meaning that various musical attributes (vocals, lyrics, harmony, etc.) are “genes” that form a large genome. As users of the service, our individual taste in music influences the genome, and it in turn influences us. Amazon.com does the same thing with e-commerce and our buying history. Netflix lets us rate what we’ve watched to make the system smarter about what it suggests we watch next.
You like Mad Men? You might also like Boardwalk Empire! That’s your Entertainment DNA talking. If it gets things wrong, you tweak it. You invest time in it. You nurture it. You expect it to always remain intact.
I want to rate Shark Attack 3: Megalodon as a one-star pile of shit once, not twice. My hope was that, at the very least, the Netflix and Qwikster services would be able to talk to each other and share my viewing data through some sort of centralized account. Even though I choose to watch certain content via DVD and other content via streaming, in theory those preferences should still influence one another.
A statement by Reed Hastings appeared coded: “There is a difference between moving quickly—which Netflix has done very well for years—and moving too fast, which is what we did in this case.”
Translation: “We tried to fast-forward to a future where 100% of everything is available online, and Netflix was poised to bring that that to you. Many of you freaked out. You’ll still have your red envelopes for now, but we’re quietly preparing for that future.”
Above photo: _tar0_ via flickr
Comments on: "The Netflix Fast-Forward" (3)
“I want to rate Shark Attack 3: Megalodon as a one-star pile of shit once, not twice. ” Seriously? I thought that was the best movie of the decade. To each his own.
But on a slightly more constructive note: I think there is still an issue with random recommendations appearing. Just because my young cousin likes Spongebob Squarepants doesn’t mean I’m rushing to watch the feature length motion picture. Perhaps the split could’ve fixed this, as most of these watches are done as a spur-of-the-moment decision. I don’t know.
And while I must say that while I called the reversal of this decision the night it was “made,” I no longer trust Netflix with anything. If I was a customer (as my parents are), I would begin feeling very uneasy about this constant flip-flopping. This is never a good thing for a company already in a bit of a rough spot.
The main factor which had to be the impetus for Qwikster debacle: Netflix pays for streaming content based on its subscriber base. Since a huge portion of their their subscribers are DVD users only, splitting the two would lower the fees.
I think the bigger barrier to their streaming utopia is not the technology, it is licensing. Whereas physical discs only had to be purchased, streaming content is a form of exhibition which must be licensed. It’s not only more expensive, Neflix must battle Blockbuster, On-Demand cable, Hulu, et al., who all seek EXCLUSIVE licensing rights.
What has made Netflix so valuable to me is access to (nearly) all content from a single provider. Unfortunately, for a consumer to have that same kind of access to streaming content, it will likely require subscriptions to a half-dozen different services and staying constantly aware of what content is licensed to what service.
Nice take, I just can’t understand why you’re hating on Shark Attack 3?