What's The Point?

-
Debbie shuffled from one envelope to the next, making mental notes as she made her way back to her house from the mailbox. "Water bill, Visa, Danbury Mint catalog," she mumbled. Suddenly her brow furrowed when a familiar, yet unfamiliar, red envelope caught her attention. "Honey," she said, making her way into the kitchen, "Did you sign us up for a new DVD service?"

"Huh?" David grunted from behind his newspaper.

"A new DVD service," she repeated, and held out the envelope. "It looks like a Netflix envelope, but it says Qwickster."

David folded his paper and said, "Oh, that," while giving a pleasant chuckle. "Netflix is Qwickster now."

"They changed their name? Why?"

"Because they raised their prices," he said.

"I don't follow," Debbie said. "What does one have to do with the other?"

David released a long sigh and motioned for Debbie to seat herself on the breakfast stool next to his. "As you know, people have been able to rent disks AND watch videos online from Netflix under a single price package."

"Right," Debbie said with an attentive nod.

"Well, at the end of August, Netflix announced they were going to sell the services separately. Each service would cost less than what people were currently paying, but ordering the two services together would cost more. People were outraged; blogs flamed the plan, Twitter was all atweet with disgruntled customers. It was a PR nightmare."

"Where does Qwickster fit in?" Debbie asked with a cocked head.

"I'm getting to that," David reassured her. "On September 19th, around 2am, CEO Reed Hastings sent what initially looked like an apology email all the customers of Netflix. Once, customers read the message though, they discovered a plan to split Netflix into two companies. Netflix would stream video online, and Qwickster would mail the DVDs."

"Wait," Debbie said. "Didn't Netflix start as a DVD mailing service and add the streaming video later?"

"Yup," David said.

"So, the new company will provide the original service, and the original company will provide the additional streaming service?"

"Yup," David said.

"And, the prices will go back down to their original levels?"

"Nope," David said. "The newly announced prices still stand, only now they'll appear as two line items on people's bank statements instead of a single total."

"Billing people twice won't increase overhead and their costs?"

"Probably will," David said.

"Will people's queues still be tied together?"

"Don't know," David said.

"What makes the separation of companies worth the higher prices and increased book keeping?"

"Qwickster will rent video games as well as movies."

"They couldn't have offered games as an additional paid service under Netflix, and kept the rest of the prices the same?"

"Probably could've," David said.

"Why are they increasing prices, bureaucracy, and over head simply to add a new service to their product line."

"Don't know," David said.

"Then, what made CEO Reed Hastings think the announcement of the split would put people's minds at ease over the price bump?"

"Don't know," David said.
-
Epilogue:

On October 10th, 2011 the following letter was sent to all Netflix users.

Dear David,

It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs.

This means no change: one website, one account, one password…in other words, no Qwikster.

While the July price change was necessary, we are now done with price changes.

We're constantly improving our streaming selection. We've recently added hundreds of movies from Paramount, Sony, Universal, Fox, Warner Bros., Lionsgate, MGM and Miramax. Plus, in the last couple of weeks alone, we've added over 3,500 TV episodes from ABC, NBC, FOX, CBS, USA, E!, Nickelodeon, Disney Channel, ABC Family, Discovery Channel, TLC, SyFy, A&E, History, and PBS.

We value you as a member, and we are committed to making Netflix the best place to get your movies & TV shows.

Respectfully,

The Netflix Team
-