Qwikster

» see qwikster.com as it lived, on the wayback machine

~ the obituary ~

the red envelope was a us postal product and it stayed one. netflix by mail never operated in turkey, and netflix itself did not turn up here until 2016, so the entire dvd half of this story is something i read about rather than lived through. in 2011 i was twenty-seven and working, and the way you got a film in ankara was still a download or a disc from a shop.

what makes qwikster worth a headstone anyway is that it is a pure business object. it had no users and no code that anyone outside netflix ever touched. it existed as a decision, and the decision was reversed before the thing it described could be built.

the setup was july 2011. netflix had been selling streaming and dvd-by-mail together for $9.99, and it pulled them apart into two plans at $7.99 each. for anyone who wanted both, that was a sixty percent increase arriving in one letter. the reaction was loud enough that by september 15 netflix cut its own subscriber forecast for the quarter by a million.

~ the case file ~

~ the twenty-three days ~

on september 18 reed hastings published a post titled an explanation and some reflections. it began by admitting he had messed up, which is unusual and to his credit, and then it announced that the dvd service was being spun out as a separate company called qwikster with its own site and its own credit card charge. video games would be added later. andy rendich would run it. the message people actually received was that the apology had a second price increase attached to it in the form of a second account to manage.

netflix pulled it on october 10. the statement was short and said that members would continue to use one website and one account under the netflix brand. no explanation of what had changed in three weeks, because nothing had changed except the volume. the third quarter closed with about 800,000 fewer us subscribers than it opened with, the first loss the company had ever posted, and the share price fell from around $300 in july to under $80 by november.

~ the funny part ~

netflix registered qwikster.com before the announcement. it did not check twitter. @qwikster belonged to a man named jason castillo who had been posting from it since april, under an avatar of elmo holding a lit joint. within hours of the announcement the handle was the top result for the new brand, and castillo, having worked out what he was sitting on, made it publicly known that he was open to offers.

there was no trademark filing on the name, so there was no lever to pry the handle loose. a company worth billions had launched a consumer brand without checking whether it could speak under that brand on the largest platform where consumers were discussing it. the account outlived the company it embarrassed by years.

~ the long tail ~

the strange part is that netflix was right. the dvd business was a declining asset that needed to be walked away from, and streaming was the whole future. netflix dvd finally closed in september 2023, twelve years later, having shipped its last disc long after anyone was paying attention. the strategy in the qwikster memo was the strategy netflix actually executed.

what it got wrong was sequencing. it raised the price first, then came back weeks later to ask people for extra work to keep what they already had. each step was defensible on its own and the order was fatal. hastings said afterward that qwikster had become the symbol of netflix not listening, which is a fair reading, though the deeper failure was talking too much. the company would have survived the price rise in silence.

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