Have Netflix Lost Their Minds? (Update: Netflix Really Should've Secured 'Qwikster' on Twitter)

Over the past couple of months, Netflix has gone from being a tech darling to, well, something else entirely. Their latest move has the entertainment industry and Wall Street doing a lot of head scratching.

 In an e-mail sent to Netflix subscribers on Monday, CEO Reed Hastings said the company is renaming its DVD rental business “Qwikster” and the Netflix name will only be used for its online-streaming service. The move will also split Netflix and Qwikster into two separate Web sites, with separate access and billing procedures.

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Under the company’s latest plan, customers will no longer have their lists of DVD and streaming videos integrated into a single queue; instead they will have to go to the different Web sites to manage their videos.

For Netflix users, and I am a former one who canceled after the company split streaming and DVDs into separate services to hike up the price, this makes no sense. Netflix’s greatest strength isn’t and never was the size or currency of its catalog. Netflix was always a little bit behind RedBox and brick and mortar DVD rental stores in release dates, but they made up for that in a big way with the integration of streaming and mail, and in their ability to suggest titles based on your previous rentals and streaming choices. Netflix made the whole process of renting or streaming movies about as painless and cheap as it could be. You could stream to your AppleTV, your phone, your computer, your gaming system, etc and track DVD rentals in one go — movies, documentaries, TV shows, you name it. That service demands integrating, not segregating, streaming and DVD rentals for as long as physical media remain viable. By spinning out Qwikster and separating their web sites, Netflix has ripped the heart out of their company’s greatest strength.

Streaming is the future; DVDs and even Blu-Ray are rapidly becoming the past. Netflix has that part right. But they’re going about getting to the future in the wrong way, and it may well kill a once great company.

Update: The Qwikster decision could really have benefited from some online research. The name already exists on Twitter, and isn’t what you’d call a good corporate citizen.