Netflix Announces Division of Company, Will Run DVD and Streaming Services Separately

By Jamie Epstein September 19, 2011

Netflix has been under the microscope since unveiling increased rates for its DVD and streaming service. It will now run these entities separately, renaming the DVD-by-mail division Qwikster.

The all new Qwikster brand was brought to light Sunday night on Netflix CEO Reed Hastings’ blog. In addition to the revamped company, Andy Rendich, who has been in charge of the DVD division of the company for over four years, will take over the coveted role of CEO at Qwikster.

According to a Business Insider article, both Netflix and Qwikster will remain under the same umbrella company, and in essence this is simply a change of the brand rather than a complete restructuring.

A major reason for this announcement and the separation of services seems to be due to the fact that Netflix wants to remain in the forefront of the increasingly popular streaming trend.

Furthermore, Netflix has realized that the benefits associated with its streaming services compared to the advantages of its DVD by mail service are stark in contrast. Qwikster will offer the same website and DVD services that everyone is used to; it just has a new name. Hastings addressed customers in an open letter stating that, at launch time, video games will now have an upgrade option readily available, mimicking the option already implemented for Blu-rays and for people who want to rent Wii, PS3 and Xbox 360 games. The company has seen an increase in demand for video games over the years, but now since the DVD by mail has its own employees, the company can leverage its portfolio of services to encompass these games.

Netflix’s recent price hikes instituted for DVD-plus-streaming customers in July have shown to be a dangerous move for the company, as subscription expectations dropped from 15 million to 14.2 million for this quarter, the article stated. Analysts, however, are taking the offensive position, claiming that the decrease in DVD customers is not as terrible as it may first appear to be as it shows a major move for the company to transition to focusing heavily on streaming, the future of movie watching.  

In his blog post, Hastings addressed the public with an apology regarding the way Netflix first revealed the fee hikes, saying in a statement, "Members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes."

The company has already announced plans for the Netflix envelopes to remain red, so don’t worry.

Jamie Epstein is a TechZone360 Web Editor. Previously she interned at News 12 Long Island as a reporter's assistant. After working as an administrative assistant for a year, she joined TMC as a Web editor for TechZone360. Jamie grew up on the North Shore of Long Island and holds a bachelor's degree in mass communication with a concentration in broadcasting from Five Towns College. To read more of her articles, please visit her columnist page.

Edited by Rich Steeves

TechZone360 Web Editor

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