Netflix hit the eject button on its Qwikster experiment this morning. Although watching movies on DVDs as well as over the Internet will still cost about 50 percent more than it did until earlier this summer, subscribers won't have to deal with two separate subscriptions, web sites and monthly bills.
Netflix chief executive Reed Hastings broke the news in a brief post on the company's blog:
This switcheroo came less than a month after Netflix's earlier, equally surprising announcement that it would spin off the DVD business as Qwikster–which in turn arrived only a month and change after the Los Gatos, Calif., company informed customers that a DVD-plus-streaming subscription woud cost $15.98 instead of $9.99.
By selecting yet another alternate ending off the DVD that is its corporate history, Netflix confirmed that it could use some serious public-relations guidance. It also invited yet another round of jokes online (two among them: "Netflix announces seven new companies, one for each major movie genre" and "New Netflix idea: For $5 a month they'll send half of a DVD, and for $10 they'll send both halves").
But don't mistake a hasty dumping of a brand name for a switch in strategy. The Los Gatos, Calif., company still wants to get away from the DVD–sticking with a pricing plan that heavily taxes those who want to watch both physical and streaming media makes that obvious. Today's move just stuffs this change back into the same red envelope as before.
The thing is, customers don't have great alternatives.
Redbox's DVD-rental service requires you to leave your house, while competing video-streaming services like Walmart's Vudu have smaller collections and don't work on nearly as many TVs and Blu-ray players as Netflix's offering.
It briefly looked like Dish Network would make a serious run at Netflix with a relauched Blockbuster site, but then it restricted this new Blockbuster offering to viewers who also subscribe to its satellite-TV service. Hulu could yet grow into a compelling competitor, but first it needs to find a buyer that–unlike the consortium of TV studios that set up the site–won't treat it as a sideshow to the traditional TV business.
Amazon's instant video looks most promising. I can attest that the selection of titles for rent is great, and the Seattle retailer has been building out the library of movies and TV shows available free to those who pay $79 a year for its Amazon Prime two-day-shipping option. But even with 11,000-plus titles available under those conditions, Amazon's Prime video remains a no-show on the iPad and on TiVo.
Netflix, meanwhile, has the advantage of being an accepted part of most people's viewing budgets, especially for those who have already switched to its streaming-only plan. Consider my own example: Our HDTV has a good Netflix app and so does our iPad, $7.99 isn't much to shell out each month (considering how it's helped us stop paying for satellite TV), and I've got a few more seasons of Mad Men to catch up on.