Netflix Cancels Qwikster DVD Spin-off & Keeps DVDs with Netflix

Netflix has listened to customers and has decided to cancel the Qwikster DVD spin-off. 

“Consumers value the simplicity Netflix has always offered and we respect that,” said Netflix co-founder and CEO Reed Hastings. “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.”

Update: Here's the offficial email from Netflix (also posted at the official Netflix blog):

Comments

[Karen]

:)

[Thomas Miller]

Probably one of the smarter moves they have made lately. I went to visit the Qwikster website and it now redirects you back to Netflix.

[travis lovelace]

glad netflix ant splitting the two services up but hope they will still add video games

[John B]

Smartest move they've made all year.

[davedave]

So Amazon broke off negotiations?

[PerrysburgGuy]

What will we do with the popcorn?

[eviltimes]

Damnit Mike, you beat me to it!

So the "Occupy Netflix" march is off I gather?

;)

[BP]

Hahahahahahahahahahahahahahahahahahaha.

Countdown until Reed and fellow executive managers either retire or are ousted begins now.

-BP

[EJ]

They listened to investors...not customers.

[MindEddy]

Seriously people, if you don't dump Netflix...just to send a message...you are pathetic. Really, you don't need Netflix for a few months. You can live without it. There is no penalty for cancelling and signing back up a few months later. Price ain't gonna change. He doesn't care about loyalty. He doesn't care about you, obviously. DUMP NETFLIX today...let them sweat....and resume your addiction next year. SEND A MESSAGE with your wallet.

[Mark1971]

I kind of feel bad for that other guy in the video. He doesn't get to be a CEO anymore.

[Seth]

Wow, what a mess.

[Robert]

So are they still gonna be adding videogames?

[Laredo]

It's not the speed, Reed. It's the direction.

[Tomguy]

Oops! Too late. I dropped the DVD rental last week.

I was getting about 7-8 DVDs per month on the 1-DVD plan.

But, the PO probably is dropping Saturday delivery. And, the area PO processing center (25 miles away) closing and centralizing 150 miles away.

That would probably reduce the deliveries to 4-5 per month for the same cost. That recent Netflix price increase didn’t enhance the situation, either.

Now, I just do the streaming, so Netflix has a net loss of about $8/month over what I was paying for the previous 18 months.

With the dropped/reduced subscriptions and stock price drops, you can bet the stock holders aren’t happy with some of Netflix’s recent decisions.

[matt]

i never thought it was that big of a deal. it's movies. a first world problem. big deal. i can handle a few extra clicks to watch a movie conveniently. either way, this works, too.

[lca]

why would anyone dump netflix to send if they're happy with the service?

He doesn't care about me? Well, I've got family and friends for that.

I use the service. I think it's good value for my money. It's not like we're dating.

My water company, phone company, directv,etc increase rates regularly. And, they increase rates regulary. I'm starting to question whether I need DirecTV. But, once I decide that I don't, then I'll cancel it.

I don't take it personally that they raise rates.

[Frank Tien]

Hasting's foolish moves has cost Netflix $200 a share since mid-July. He has completely destroyed the retirement and savings of a lot of people by being a short-sighted jerk.

He needs to get fired since it's obvious he's still the goofball that just hated paying a late fee and not a true visionary CEO. Give him his money and get him away from the company.

Fire Hastings Now!

[SteveI]

Oh man......and I'd already (mostly) emptied out my DVD queue, only have 12 titles left. I wasn't going to mess around with keeping 2 different accounts, etc.

Now what the hell am I gonna do??? LOL....

[RJM35126]

Better late than never.

Think losing BILLIONS in marketcap had anything to do with it ? LOL

[Adam Smith]

To Frank Thien: anyone who would stake their retirement on a tech stock is asking for trouble.

[Quaid]

Did anyone else notice they mistyped Qwikster in the email they sent out?

This is a good thing, but I feel like they were just threatening us with how bad things could be, so we'll be grateful now that they've stepped back to their original position.

[John Dover]

@Tomguy While it was great value for you, if you were turning around a 1 DVD plan fast enough to get that many movies a month, you actually cost Netflix more than you were paying for it, so they actually are better off with your dropping to streaming only. Your reasoning may be correct for you, but Reed manipulated you into increasing their profits anyways. So at some level teh investors would not be unhappy about your specific case.

[jheartney]

Just scratching my head here. The reasons given for dumping Qwikster were being screamed at the company from a million comment posts within minutes of their announcing the new company, by a mass of regular people Reed Hastings is paid to be smarter than. How is it possible they could have not thought of these objections before the initial decision?

And what of the theories that the the real reason for spinning off the DVD business was part of a cunning plan to eliminate conflicts of interest with streaming rights-holders? Or the idea that dumping the dying DVD business would let Netflix make business decisions for the benefit of the streaming business without having to worry about the legacy parts of the company?

[Rudyroundhead]

With the post office presumably dumping Saturday mail delivery at some point in the future I was probably going to dump the DVD plan anyway. This won't change my decision. I am one of the few that thought Qwickster was an absolutely horrible idea but I understood why. The execution was terrible and these guys are paid to be CEO's.

My guess is the DVD portion of the business will still be sold off at some point in the future as streaming is the way to go. They can spend the money they make from the sale of the DVD portion along with the money they save from no longer mailing to add more and better quality selections to the streaming side.

[MovieDearest]

Doesn't Netflix do any market research? They could have avoided all this plus all the negative press by running things by their customers before they do anything drastict.

[Bob E.]

"Netflix Classic"

[Anthony]

Since they clearly don't give a crap about their customers this must mean that the deal to sell off the DVD business to another company fell through.

[Anthony]

I'd be interested to know how much stock was sold by insiders prior the the announcement and how much is being bought back. Hopefully the answer is none but the stock tanked with the original announcement and now is rocketing back up following the "our CEO is an F'ing idiot" email.

[Matt]

There will be a time, in the near future, where Netflix will ultimately drop dvds by mail and focus on the streaming part of the business. Hopefully, Amazon will provide a better alternative. With that in mind, Amazon will have to increase their prices for their service. They have a long way to go.

As for Hastings, if any other CEO had driven their stock down like he has, he'd be fired. C'mon stockholders express your anger by firing him.

[Anthony]

On Oct. 4th there was quite a bit of insider trading and I didn't see a single person selling. They were all buying additional NFLX although Reed Hastings sold 5000 shares at 128 and then bought 5000 shares at 1.50 if I'm reading the filing correctly. He actually did this again on 9/22 as well. Also some company named JAT Capital Management bought 7% of the company on 9/30. I may be totally wrong here so please let me know if that's the case. Maybe it's nothing but I found it interesting.

[moviegeek]

Reed Hastings is an idiot and needs to go.

[RJM35126]

Can you really justify firing Hastings ?

Sure, the PR lately has been bad, but compare NFLX to the market averages since going public. I wish I would have bought it way back then.

If you are going to blame him for the screw ups, you have to give him credit for the overall wealth he has created, even after the recent crash.

That said, I dont have the first clue how to value the company. I am an experienced investor, I just dont buy high flying tech stocks.

[MH]

"We are now done with price changes." Remember Bush the 1st? "Read my lips, no new taxes."

+1 to the consumer. Someone is finally listening at Netflix.

[al]

is netflix going away soon?

[ts]

This smacks of a company totally coming off the rails. It's been one keystone cops miscue after another lately. Whatever. I agree w/ the other post'er that as long as they offer a service I like at a price I like I'll stick w/ it (streaming only here) until it no longer pleases me.

[UltimateOutsider]

Thank goodness. I'd really like to know what led to the change of mind, but in the last couple of years, Netflix has never provided a convincing explanation for ANY of their changes to their service.

I do believe that splitting the services was an invitation for Blockbuster to come eat their lunch, but I doubt that's it. And we all know it has nothing to do with the comments on their blog posts...

Did the stock trend finally set them straight?

[moviegeek]

You don't actually believe Reed when he says there won't be any price changes in the future, it's inevitable.

Reed was smoking crack this year, I hope he gets ousted and gets the help that he needs.

[Bob]

Let me put on my tinfoil hat for a moment: maybe there were some content licensing negotiations going on behind the scenes that fell through, killing their split-the-company business model. Or, as davedave said above, negotiations to sell one of their business units to Amazon (or some other bidder) fell through.

[Ryan]

Too bad I already cancelled my disc service.