When Netflix recently raised prices and separated out their DVD-by-mail and streaming pricing, there was a minor revolt among users. So many cancelled their service, in fact, that Netflix's stock took a 15% hit. Still, I don't think anyone saw this coming: from now on, Netflix will only offer streaming titles. If you still want DVDs by mail, they're going to come from a new brand: Qwikster. Wow. Here's the announcement:

The official word from Netflix CEO Reed Hastings:

Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD, plus lots of TV series. We want to advertise the breadth of our incredible DVD offering so that as many people as possible know it still exists, and it is a great option for those who want the huge and comprehensive selection on DVD. DVD by mail may not last forever, but we want it to last as long as possible.

I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We feel we need to focus on rapid improvement as streaming technology and the market evolve, without having to maintain compatibility with our DVD by mail service.

So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to “Qwikster”.

Some initial knee-jerk analysis in a retweet:

[twitter https://twitter.com/#!/ryanbkoo/status/115653879600906240]

Link: An Explanation and Some Reflections - the Netflix Blog

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Distribution & Marketing