Netflix Killing Qwikster Plan: A Move to Stop Declining Number of Users

Netflix could have saved itself from seeing a steep drop in its subscriber base, by dropping the plan of launching a separate Web site for its DVD-by-mail services.

The digital video rental company, on Monday, reversed an announcement made last month which said that Qwikster.com would be launched for its movie-by-mail services, while Netflix would handle the streaming video segment.

It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs, said Reed Hasting, the co-founder and Chief Executive Officer (CEO), in a blog post.

The Qwikster spinoff would have increased the pain of Netflix users, forcing them to maintain two accounts, two passwords and, most importantly, double their subscription costs. Netflix has already hurt its users when, in July, it announced an increase in fees for the DVD business, by as much as 60 per cent.

The move went completely awry for the company and it suffered at the hands of competitors like Blockbuster, Redbox and DirectTV. The move also brought down the company's number of customers by approximately 1 million.

Netflix users were even more worried when they heard about Starz, the powerhouse supplier of content to Netflix, stopping content supply from early next year. Many of them took to social networking sites and said that they were getting far too little value for their money.

After Qwikster was announced, the market continued to punish Netflix, pushing its shares, on Friday, down to $117.21. It appears unimpressed by the latest twist. On an otherwise bullish Monday, Netflix shares fell to $111.62, according to a report on Philly.com.

July price change was necessary, we are now done with price changes, said Hastings, in reaction to the criticisms. He also emphasized that the company, despite losing Starz, still has lots of content for its customers.

We're constantly improving our streaming selection. We've recently added hundreds of movies from Paramount, Sony, Universal, Fox, Warner Bros., Lionsgate, MGM and Miramax. Plus, in the last couple of weeks alone, we've added over 3,500 TV episodes, Hastings added in his blog post.