Monday, September 19, 2011

Netflix’s DVD business: Does Qwikster have a future?

Most, perhaps all of the commentary about the Netflix decision to create separate streaming and DVD by mail businesses seems to be negative. Netflix says the separation will provide an easier user experience, but a fair-minded person might question that position.

Creating two separate billing entities, with different and distinct commenting and rating systems, with the need to update two different sites when personal or billing data changes, is hard to envision, as an enhancement.






Some users will gladly trade off selection for immediacy. As Netflix moves toward offering more TV content, that could change. Netflix users might find they have a wider selection of TV content to choose from, compared to Qwikster users. For TV-centric viewers, that could be the tipping point. For movie-centric users, the tipping point might be quite some time away.

Perhaps most think the separation, which could result in better management of each entity, might speed the demise of the DVD operation. The transition is likely to be more gradual than many expect. The reason is the value proposition. Right now, the streaming operation simply does not offer the content richness that the DVD by mail option can offer. And in a content business, breadth of content matters.

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