The Netflix Identity Crisis

I got the most extraordinary email earlier today, from Reed Hastings, the CEO of Netflix.

The email is also posted on The Netflix Blog, if you want to go and read it in its entirety.

Upon the heels of Netflix’s announced price increases, which went over with many Netflix customers like a ton of bricks, Hastings is now announcing that Netflix is going to become the “Sybil” of video delivery services, online and off.

That is to say, Netflix as we know it shall be no more.  The Netflix you used to know — you know, the one that delivered DVDs for years and helped close a few thousand Blockbuster stores — well, they’re now going to be called “Qwikster.”

I know, they clearly don’t have a corporate naming department over there at Netflix…err, Qwikster.

From here on out, Hastings explained, Qwikster will do the DVD deliveries.

Netflix, which used to do DVD deliveries, is no longer going to do deliveries, because they’re going to be the streaming part of the former Netflix.

The new Netflix is the same as the old Netflix, minus that key part of DVD deliveries, which apparently is no longer key.

Ya got all that?

Now, let me just say this: I’m a HUGE fan of Netflix and/or Qwikster.  I’m more a fan of the new Netflix than I am the old, meaning I prefer the online streaming delivery model to the USPS model.

However, there’s one big issue with this move: The better content library seems to be in the Qwikster part of the business, which is exactly the opposite of the way it should be.

The streaming delivery model should be the core of the Netflix model, but everytime I go to Netflix online, I struggle to find new and/or interesting titles that have at least a three star rating (I’ve found that’s the minimal threshold for watching movies on Netflix).

In fact, I’ve been watching mostly foreign films (which I have no problem watching whatsoever) lately, because the Netflix library is much deeper with foreign distributors than American ones (read: Hollywood ones).

And therein lies the real problem. Hollywood is still scared to death of being “Napsterized.”  They want control of their content, come hell or highwater.  And the early deals they stuck with Netflix were made when streaming was still a novelty.

Well, those days are over.  Streaming has grown up: It’s convenient, it’s immediate, and it’s a huge business opportunity, for the Hollywood studios as well as filmmakers around the globe.

There’s no stopping it, not even with Netflix’s latest branding identity crisis.  The big question that remains is, who of the big movie industry players is going to step up and make a deal.  A BIG deal, one that offers a deep and wide movie library that benefits consumers, but identifies a business model that can work for the studios and the Netflix/Qwiksters.

Because if THEY don’t, someone is going to.  Or not.  And then the so-called “Napsterization” of Hollywood will make what happened to the music industry seem like “The Bad News Bears” meets “Moneyball.”

Ultimately, avid movie fans like myself want just a handful of small things, none of which seem too much to ask: a robust library of movie choices at reasonable prices delivered the way we prefer.  Again, let me mention that we’re willing to pay for it!

Increasingly, that channel is going to be via streaming, and no amount of putting-head-under-the-sand by Hollywood studios is going to alter that direction.

Despite all the consumer hysteria about this change that’s already bubbling up across the Blogosphere, I have to say, that probably is the best and most valuable lesson from this whole endeavor: The fact that Hastings made his announcement in a letter he sent out to customers via email and posted on the Netflix blog.

His customers, according to the comments section, are mostly not in favor of this move.  But what’s different is: Hastings and his team are given his customers a direct vehicle response to the message he delivered to them.

Only time will tell whether or not Hastings and team heard them.