announced this morning that it is abandoning its plans to spin off DVDs into a completely separate company called Qwikster. Under the plan Netflix would have become a streaming-only company.
The Qwikster plan would have called for two passwords, two bills, two separate queues, and looking up every title twice to learn viewing options. Not to mention the fact that Netflix gave the new service an insultingly awful name.
Qwikster will almost certainly be discussed in business school textbooks of the future, where it will be listed alongside New Coke as an infamous example of a company not simply poorly executing a plan, but out-and-out losing its corporate mind.
Thankfully Netflix has listened to unhappy consumers and reversed course.
A Netflix spokesman said this morning, "We underestimated the appeal of the single Web site and a single service. We greatly underestimated it."
Netflix not understanding that its core appeal has centered in large part on customer convenience is perplexing, to say the least.
The company executives were focused on putting the needs of the company ahead of the needs of the consumer, forgetting the very reasons the company became such a success. And beyond the executives' admitted blind spots, didn't Netflix even focus group this new idea? It's hard to believe the idea would have passed muster in a room full of Netflix users.
It will be interesting to follow analysis of the decision as the day goes on, as well as follow consumer comments at the Netflix blog and Hacking Netflix.
Meanwhile, Netflix stock is rising today, after tumbling dramatically in recent weeks.
Previously: Netflix News: Netflix Jumps the Shark?; Netflix News: A Qwikster Roundup.