Netflix finds itself in a rather unsettling position. The company is having trouble convincing all the major content providers to jump on its streaming service — as evidenced by its recent troubles with Starz — and its CEO Reed Hastings’ recent apology didn’t go over well. All the while, shareholders are jumping ship at an alarming rate over concerns that the future might not be so bright for the company.
But Netflix believes it has a trump card ready to go. And that trump card is named Qwikster.
After apologizing to users, Hastings announced that Netflix is spinning off its DVD-by-mail business, and calling it Qwikster. The move won’t change pricing in any way, and current customers won’t see an interruption in service. However, in addition to movies and television shows, those folks will be able to rent video games — for an additional fee.
Hastings, trying to keep a brave face, made it seem like Qwikster would be the next big thing in rentals. And all the while, he failed to prove why those who were concerned with paying about $16 per month for streaming and DVD rentals would find so much more value in doing the same, but paying Netflix and Qwikster $7.99 per month each.
The fact is, Netflix should have made it right in a different way. Rather than simply apologizing, the company could have said that it was wrong with its new pricing scheme and gone back to the old way. Or if it couldn’t justify that from a business perspective, maybe it could have found more suitable financial terms for customers. Simply spinning off a business and adding game rentals just won’t cut it.
I have to say, I’m a little concerned with Netflix right now. Although I think the company will remain financially stable for the coming years, I’m not necessarily convinced that it knows what it needs to do to be overwhelmingly dominant in the marketplace.
Think about it: Netflix is the biggest player in the streaming market, and has been for quite some time. And yet, it hasn’t been able to fully pull away from competitors, like Amazon, and content providers are still unwilling to play nice. Although we’ve been quick to blame those providers for failing to see the changing times, what if it has more to do with Netflix not understanding what it needs to do to make a deal work?
Luckily for Netflix, it’s facing off with competitors that are clueless. Amazon’s streaming service has been largely ignored by many consumers, and the idea that Dish will offer up a Blockbuster-branded service soon is almost laughable. But what if Apple joins the space with all its might instead of just trying to offer some content via iTunes? Apple knows how to get things done. And Netflix’s poor management as of late seems to indicate that the company won’t be able to respond too favorably.
Although there are some that support Netflix’s Qwikster move, I just don’t think it was a good idea. Both the name and the idea make the company look foolish. And looking foolish is something Netflix doesn’t need right now.