Netflix, Qwikster Split May Prompt 30 Percent to Cancel: Study
Almost a third of Netflix subscribers are planning to cancel their subscriptions following the split of Netflix and Qwikster, according to a survey released Tuesday.
Netflix Inc., the lead provider for popular DVD rentals and video streaming announced Sunday that it now separate into two entities, one an online streaming service and the other a DVD-by-mail service called Qwikster.
The change comes two months after a spike in prices, which received backlash from the many customers. Back in July, Netflix decided to raise its prices by up to 60 percent for the millions of subscribers who want to rent DVDs by mail and watch movies online.
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But the changes have prompted about 30 percent of Netflix subscribers to say that they will cancel their service or are seriously considering it, media research firm Frank N. Magid Associates Inc. said Tuesday.
The firm, which surveyed 1,000 Netflix users, also reported that Netflix subscribers will be using Redbox more in light of the price increases at Netflix. Of the 60 percent of respondents that say they use Redbox, about 30 percent say they will use Redbox more now.
Some of the 24.6 million Netflix in the U.S. have already expressed disappointment with the new structure, saying it forces them to choose between the online streaming service and convenient DVD mailing service whereas the old model allowed them the best of both worlds.
CEO and co-founder Reed Hastings took to the Netflix blog to apologize about the large dismay of hurt customers Sunday. He began with, "I messed up. I owe everyone an explanation."
He then explains that streaming and DVD by mail are becoming "two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently."
The previous Netflix package offered both services as a single package around $10 per month. The new price will be $8 for each service. The price changes took effect immediately for new subscribers but began Sept. 1 for current Netflix customers.
According to AP, more than 40,000 people had responded to a post on Netflix's Facebook page announcing the change, with some saying they would switch to rivals such as Hulu.com's paid service and to Redbox's DVD-rental kiosks.
Hastings ends his blog stating, "Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.
