UPDATE: Qwikster lasted about a month. This article at HuffPo calls the idea “dumb, dumb, dumb” and rates it right up there with New Coke and Chris Gaines.
Netflix shocked their customers this summer by basically doubling their pricing plan. They reasoned that profits lost by customers leaving would be offset by the increased profits of the price hike. Streaming + 1 DVD level customers would be the most likely to bail, and they were getting the most benefit for the least cost. It was a calculated move.
More recently came the announcement that online streaming and DVD mailing would be separated into two different subscriptions. That proved remarkably unpopular, and is NOT what Netflix decided to do. Instead Netflix will focus exclusively on streaming and the DVD service will be re-branded as Qwikster. Netflix.com and Qwikster.com will be two different companies; you’ll have two different websites, two different services and pay two different bills. Read the official Netflix explanation and letter of apology here.
Netflix will be greatly expanding their online streaming content in coming months. The recent price increase allows Netflix to purchase the rights to the content they offer. We’ve been expecting Netflix to get out of the DVD by mail business eventually. Apparently this is how they are doing it.
UPDATE: Marc Randolph – co-founder of Netflix, no longer with the company – on why they did exactly the right thing. Did Netflix screw up? I don’t think so.