The Orange View (on hiatus) Because Apple is great but it isn't perfect

19Sep/11Off

Divide and conquer, Netflix style

Netflix CEO Reed Hasting announced a dramatic move this morning, splitting his DVD-by-mail video service from his Internet streaming video service. Opinions are divided. I am most interested in how this will affect Hastings' negotiating position with the big Hollywood studios but I need to ponder it a bit more.

Count Ryan Paul at Ars Technica among the pessimists:

Although the move to split the services into separate businesses might make sense on some level, the decision to dismantle the long-standing integration between the services seems highly dubious. Consumers will have to tolerate a reduction in functionality on top of the unpopular price increase. Amid these problems, Netflix continues to struggle with broadband caps and the challenges of negotiating content licenses. The company recently suffered a blow to its streaming content inventory because Starz decided not to renew its contract with Netflix.

-Ars Technica, September 19, 2011

Venture capitalist Mark Suster marks out the upside case on his blog:

It’s rare in business to see somebody like Reed Hastings tackle the massive changes happening to their businesses and deal with them before they’re too late. Imagine if the record labels had been as bold. By making the separation Reed can now point the Netflix business squarely at the future. Netflix can stop having to answer questions about its DVD business.

-Both Sides of the Table blog, September 19, 2011 

Meanwhile, Harry McCracken writes the most interesting and least predictable post, ruminating on the new name for the DVD rental side, Qwikster, in his great post: Qwikster: Not to be Confused With Quixtar, QuickStar, Kwikster, Quickster, Kwik Star, Quik-Star, or Kickstar.

Posted by Aaron Pressman

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