Qwikster: Netflix To Spin-Off DVD Service

Netflix is giving their DVD by mail service a new name - “Qwikster” - in an apparent effort to spin-off their legacy business (prior to a sale of that business? or simply another step in what many suspect is a march toward oblivion for a delivery system that is dying out?). Or could it be - as at least one wag has suggested - the launch of an Internet-based chocolate milk delivery service?

In a late Sunday night blogpost Netflix CEO Reed Hastings explained: "We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.""

After the separation, people who subscribe to both services will have to log into two separate websites, Netflix.com and Qwikster.com, to manage their movie queues and account information.

Two logins and two queues suggests that Netflix isn't really intent on making Qwikster convenient. And you've got to wonder about a new media start-up that doesn't own its twitter handle ("@qwikster" belongs to a pothead who apparently looks like Elmo and calls women "bitches").

Netflix customers were incensed in July 2011 when the company announced that it would stop bundling the streaming service for free - as they had been doing - with their DVD-by-mail plans. Consumers who wanted both services faced a price hike of 60%.

After two months of controversy and a 20% drop in his company's valuation, Netflix CEO Hastings finally offered an apology - not for the price increase - but for failing to clearly communicate why the change was being made. Even though streaming overtook DVDs at Netflix at the end of 2010, Hastings says he has no immediate plans to shut down the Netflix (now "Qwikster") network of DVD distribution centers (many titles are not available for streaming - so DVDs still represent the largest selection of titles). The regional mailing centers (warehouses that ship and receive the iconic little red envelopes that will now carry the Qwikster logo) represent a big expense. But regional distribution centers are also the key to the rapid delivery of DVDs in the mail - the legacy business that built the Netflix brand back in the olden days when the business was founded (circa 1997).

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