The major publishers seem to be desperate to hold onto printed books for as long as they can, doing everything possible to try to make e-books less attractive than print books. (Though to what extent they’re really doing this has long been a subject for debate. Consumer complaints aside, even agency-priced e-books still seem to be selling pretty well.) But what might it look like if they went the other way—shoved the New Media throttle wide and cut the rope to the Old Media barge they’re towing?

It might look more than a little like what Reed Hastings is doing to Netflix.

Last night, Hastings caused no small amount of consternation when he announced that he is spinning off the disc-by-mail rental business into a separate company, Qwikster (and adding game-disc-by-mail rentals to it), completely severing its relation to the streaming portion of the business that remains under the Netflix name. This means that not only are customers paying two different prices for mail rental and streaming, they’re going to be paying them to different companies that are not linked to each other.

Engadget’s Darren Murph points out:

Of course, everyone’s seemingly focused on how much of an annoyance this is for customers in the here and now, and I can’t readily disagree. Having two separate movie queues, two separate charges and two separate rating libraries sounds like a heck of a lot more work. But that’s exactly the point. Take a closer look at what Reed is aiming for here: if he’s "moving quickly," there’s at least a sliver of a chance that Netflix is proactively separating itself from a dying business (DVD-by-mail), while leaving the namesake on a business that has huge growth potential (global streaming). It also gives Netflix proper the ability to focus solely on hammering out better content deals for customers, pushing for earlier access to new releases and perhaps even landing deals that would’ve been impossible with the DVD business still along for the ride.

Murph notes that the disc-rental-by-mail business could continue to be profitable for quite some time, but it’s clearly not where the future is heading. By burning the boats this soon, Hastings is forging ahead into a very young market while most of his competitors are still clinging to the same old thing—just as he did by launching disc rental by mail in the first place. (And look how well that worked out.)

It’s not a perfect parallel, of course. Printed books don’t require expensive equipment to read but e-books do, while DVDs and streaming movies both require an up-front investment (though less so for the physical DVDs now, as inexpensive as both DVD players and old analog TVs have gotten). Still, it’s interesting to contrast Reed Hastings’s consistent looks forward with the publishing industry’s attempts to hold onto the dead-tree-pulp past.


  1. Oh gads. Some (and soon more) of us require the closed-captions with movies/tv shows (not matter how we watch them). Until they resolve this, streaming is not an option. Period. Add in that not everyone has hi-speed Internet, and many folks have bandwidth limits, and I don’t see how this will work. I’m really disgusted with Netflix.

  2. I suspect that over time they will continue to add more and more to the streaming side which makes that an attractive place to stay if you tend to be patient. If you consume movies like they are going out of style (we don’t) then yes this is going to be a pain. From a business perspective you have to admire the fact that Netflix is looking around the next curve.

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