The Case for Screwing Up Netflix

Marc Randolph, a former Netflix employee--he was a founder and the first CEO--has chimed in on this whole Qwikster mess. He makes a more compelling, coherent case for divvying up the company's streaming service and disc-rental business than anything that Netflix/Qwikster has said in its own defense:

So even though I haven't been at Netflix in a long time, I can easily imagine the growing frustration they must have felt these last few years as they made decisions they knew were suboptimal for the streaming business in order to maintain compatibility with the DVD business. How to work out pricing that covers multiple use cases. How to come up with messaging that embraces two different ways to receive movies. How to manage the significant differences in the content available between the two services. How to simplify the landing page and sign up flow.

Well no longer. Not having to worry about compatibility between the services makes it infinitely easier to optimize every decision around the real prize, which is clearly streaming. Pricing. Messaging. Content. Sign-up-flow. All better now.

Randolph doesn't defend Netflix's communications about the price hike, name change, and related matters: He calls them "ham-handed" and "tone-deaf." But I wonder how well Netflix customers would be taking the news if the company's communications had been flawless, and if it had come up with a way better name than "Qwikster."

I don't come away from Randolph's piece entirely convinced of the righteousness--ham-handed, tone-deaf messaging aside--of what Netflix is doing. Or maybe I'm so convinced that I don' think the company's going far enough. I mean, if renting DVDs by mail is so unpleasant a business to be in, shouldn't Netflix just sell, spin off, or shutter Qwikster? Sooner or later, it's going to take one of those actions. Why not do it today, rather than complain about all the downsides of disc rentals and how they're standing in the way of the streaming business?

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