On Netflix, Qwikster and Shifting Demand


A couple months ago, Netflix announced a new pricing structure, essentially separating the billing for streaming and DVD services, rather than treating the streaming option as a throw-in with a DVD subscription. Given the way the market was moving, it made some sense, but public reaction would have led you to believe that Netflix was now in the business of slaughtering kittens and selling their blood -- and overcharging for the blood at that.

Well, the company has finally responded, sending out what has to be the longest, most rambling P.R. mea culpa/product announcement I've ever seen:

That's not the whole thing. It keeps going on and on, and I'm sure most people were on the Internet within minutes registering their disgust throughout the world. Me? Well... honestly, I'm kind of fine with this.

First, let's break down what's actually happening as simply as possible:
  • The previously announced pricing changes are staying in place
  • To clarify what drove those previously announced pricing changes, Netflix is splitting its streaming and by-mail DVD businesses into two separate operations, that get paid for separately.
  • The streaming operation keeps the "Netflix" name
  • The by-mail DVD operation is being re-named "Qwikster"
  • The two operations will have separate queues and separate billing.
It's that last point that people seem to be going apeshit about, and I guess I can kind of see how managing two separate queues could be annoying if you're keeping both services, but I've never been a fan of the unified queue to begin with. When I've used Netflix Instant Streaming, and that use has been limited, I've almost always used it to watch entirely different things that the kind of things I've kept in my DVD queue. Yet when I add something to my DVD queue, it gets added to my streaming queue automatically. I've never liked that at all. Is it nice to know that something sitting in my queue is available to watch immediately? Sure. But I knew that from the visual "PLAY" indicator when I added it to my queue. If I'd wanted to watch it instantly, I would have done that.

Putting my own personal usage case aside, it strikes me that people are disproportionately angry about this for two reasons. First, they expected Netflix to reverse the pricing decision based on the initial reaction, and when that didn't happen, they decided to immediately hate whatever was coming next. Second, the idea of managing two queues has the perception of being this massive time suck, when in reality it's probably nothing more than a minor inconvenience unless you're regularly bumping up against the 500-item queue limit (and if you are, you may need to reevaluate your viewing habits).

As for the separation of billing, well, that makes it easier for me to cut the cord on one of the services being offered... the streaming.

Yes, I know that seems weird, particularly since many pundits believe that this separation is the first step in Netflix killing off the DVD-by-mail operation entirely, but this has been my plan for awhile (well, technically ever since Netflix announced the price changes). I have nothing against the Netflix streaming service, but I just don't use it nearly enough to justify paying for it. Personally, I've got a digital video library of more than 600 movies and 100 TV series, and I can use AirVideo to stream those to my iPhone or iPad directly from my computer.

I know that's not a common situation, but it is MY situation, and it fully justifies my decision to cancel instant streaming. Why am I paying Netflix for a service that I am fully capable of offering to myself? Over the last six months, I've probably used Netflix Instant less than half a dozen times. While overall demand might be shifting one way, my personal demand is shifting the other way.

Additionally, for various reasons I can't get in on that whole "cable cutting" trend, so I still pay a significant amount every month for TV access. With that now comes access to apps like HBO GO, TNT and TBS and other TV show apps that give me a surprising amount of access to back catalog items that are the staple of the currently Netflix Instant lineup (I'm currently using HBO GO to catch up on "Game of Thrones", which I missed when it was actually on the air).

I may consider bringing instant streaming back at some point, but that's going to take a significant improvement to the streaming content library. Just yesterday, I went to add a bunch of relatively recent releases to my queue (I'm not going to call them "new", thanks to the 28-day delay window). All told, I dropped about 25 DVDs in there. You know how many were available to stream instantly? ZERO. It made me question why I was paying for streaming at all, and today's announcement just made it easier for me to make the decision to drop streaming.

One last point on the new "Qwikster" operation (and I'm still hoping they reconsider that name... it's awful): they're going to be adding a video game option as an add-on, much like they have for Blu-ray now. Assuming it's not too expensive, I'll probably jump in on that. I've always wanted to get GameFly, but I'd heard horror stories about the shipping lead time. With the Netflix distribution channel already in place, this could be a very good way for me to evaluate games I'm unsure about, or blow through games that don't have significant replay value.

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