(Image Source: Netflix)
BY ADAM FALK
ANCHOR LAUREN GORES
You're watching multisource busines news analysis from Newsy.
If it looks like Netflix. Plays like Netflix. Charges like Netflix. Then, it might be Qwikster. Netflix CEO Reed Hastings announced Sunday the recently less-popular DVD and streaming service will split into two companies.
During the announcement, Hastings made a public/YouTube apology for the recent price hike. He explains the company realized it needed to split up DVD and streaming services.
"When we communicated that to our subscribers, and it involves a substantial price increase for most members, I didn’t make the communication, and we didn’t explain why we were doing it. ... I just want to say how sorry I am about the way we handled our communication around these big changes.”
So, healthy split or messy breakup? An EW blogger is quick to point out the downside of the division.
“Since the Netflix and Qwikster sites will no longer be integrated, users will have to subscribe to both services, entering in their credit card information separately. But never fear, purists: Hastings says the red envelopes are here to stay.”
But one big pro to the split, Qwikster DVD service will expand to offer games - an area dominated by GameFly, a rental service that’s long held the title of Netflix-for-games. A Techcrunch blogger says GameFly should be nervous but notes...
“If GameFly has any advantage in this surprise battle they’ve just found themselves hurled into, it’s the breadth of their catalog. While Netflix/Qwikster only plans to ship Xbox 360/Wii/PS3 games at launch, GameFly’s collection includes everything from the DS and the PSP to last generation of consoles.”
Hastings says the split is a done deal and so are the new rates. A CNET blogger thinks the CEO’s apology sounds sincere--- but that he missed a change to be even more upfront with streaming-only customers.
“Why not provide a frank acknowledgement that streaming video content isn't easy to come by and that the price hikes are a necessary to ensure customers get a good supply
The New York Times reports the price increase has already cost the company 1 million of its 25 million customers. And current expectations reflect the decline. According to this chart from Netflix, the company is planning for 1 million fewer customers in the third quarter. (Graphic: Netflix)
But a blogger for Forbes, who owns a small software company, says, ‘Hey Netflix, I know how you feel.’
“Hastings went for the bucks, and got knocked down. My company may be infinitesimally smaller than Netflix, but I still get it. We’re both finding that raising prices in 2011, particularly in the technology industry, is not easy to do.”
No word yet on when Qwikster service will kick off.
Be sure to follow @NewsyVideos on Twitter for all our tech updates.
Transcript by Newsy.
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