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The Great Red Netflix debacle

Posted by David on September 20th, 2011

Movies and games? Where do I sign up? And why am I eating popcorn while shooting guys?

As I’m sure you’ve heard, Netflix has decided to launch their DVD service as a brand-new company called Qwikster. This has caused quite a stir, much like Netflix’s price hike earlier this year, and idiots people are angrily, and incoherently sputtering all across the internet, “What is wrong with you jerk-offs!?” Unfortunately, it’s not as simple as Netflix being greedy or their CEO, Reed Hastings, suddenly going verifiably insane.

Netflix is under tremendous pressure because studios want more money to license the movies and shows that people love so very much. As it turns out, when a product is in demand, and being the middle man is your primary business model, whoever is supplying that product has you bent bare-assed over his giant, pinstriped knee. Netflix doesn’t create any content, so it means studios can hold out for higher rates, while Netflix is left begging like a snot-nosed infant howling for candy and a diaper change.

In fact, that’s almost exactly what happened when Netflix and Starz couldn’t come to a rate agreement not long after Netflix hiked subscription rates. What people don’t seem to understand is that the mailing subscription business is slowing harder than the streaming service:

Netflix said it now expects 800,000 fewer DVD-only subscribers. It expects 200,000 fewer streaming-only members than it previously forecast.

This is partly the result of the price hike, but it’s likely also customers bailing on DVDs altogether. I see the Qwikster split as Netflix protecting their necks. So what is Qwikster providing that Netflix didn’t?

Video game rentals.

Suddenly, I have a reason to be interested in receiving things by mail again. As far as I know, only Blockbuster and Gamefly do video game rentals by mail, so this is Netflix (Qwikster) setting foot in a market they didn’t have before. And if Netflix’s history with Blockbuster is any indication, Blockbuster can look forward to getting spanked harder than a studio exec at his weekly dominatrix session. The other thing is that Gamefly only does video games, so if Qwikster winds up having a decent selection and a lower price point, Gamefly might have some competition. Plus, if I can order games or movies, I have every reason hit up Qwikster for that.

Ill will aside, Netflix has always been great for me, so rather than immediately blow up and rant and rave and piss and moan, I think I’ll reserve some cautious optimism and hope for the best. So far, the biggest downside I see to the whole thing is not being able to easily add movies from your instant queue to DVD, but honestly, if they don’t figure out a way to easily do that, maybe they really have lost their minds.

Even then, physical media is on the decline, so think about what’s actually going on before you break your head off in your own, angered ass. This might actually make sense for Netflix as a service and as a company as a whole. If not, you’re probably welcome to take your business elsewhere. Seriously, Reed Hastings told me that. He also said he was sorry and he’d do anything to keep you, baby… please don’t go.

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