Netflix nixes Qwikster spin-off plan

LOS GATOS, CA: Only a month after Netflix said it would spin-off its DVD-by-mail service into a separate operation called Qwikster, the company has scrapped the idea.

LOS GATOS, CA: Only a month after Netflix said it would spin-off its DVD-by-mail service into a separate operation called Qwikster, the company has scrapped the idea.

Netflix sent US consumers an email Monday morning saying it would bring its DVD-by-mail service back under the Netflix brand. It will also rejoin the DVD-by-mail part of its business with the streaming service and again operate them both through one website.

"We realized that we underestimated the value of the single-site experience for our members, and we reversed the decision to launch Qwikster," said Steve Swasey, VP of corporate communications at Netflix.

Netflix issued a press release, and Hastings posted an update on the company blog earlier today about the decision. The company is also fielding media calls and posting updates and responding to inquiries on its Facebook and Twitter pages.

Swasey said the company is not working with an outside PR agency on today's announcement.

Netflix CEO Reed Hastings said last month that the decision to split the company in two was made to aggressively expand its streaming operation by severing its ties to the DVD services. Consumers, many of whom were still upset by a 60% price hike announced in July, largely panned the Qwikster operation, which never launched.

Andy Rendich, who was named CEO of Qwikster, will remain head of Netflix's DVD operations. He has served in the position for the past four years, said Swasey.

Nearly a week later after unveiling the Qwikster brand last month, the company added to its comms team and said it planned to hire a Qwikster CMO, communications head, and other corporate communications positions.

Jason Schlossberg, president and partner at Kwittken and Company, said he thinks customer negativity is bred from what appears to be a lack of a forward thinking communications strategy.

"Watching it from the outside, it feels as though the corporate communications department is not driving the communications strategy at Netflix, and has not been at least throughout this whole period," said Schlossberg. "That potentially is one of the bigger issues. There just doesn't seem to be any thought as to how these communications are really going to play out both through consumer media and business media."

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