After a series of uncharacteristically bad mistakes, I thought maybe, just maybe, Netflix had a secret plan. Netflix has been very good at understanding the market historically and offering people what they want for a good price and a decent selection. And, most of all, the make it simple for their customers.
Secret Plan A: Amazon Instant Video Buys NetflixAmazon has bent over backwards (and twisting states’ arms) so its customers don’t have to pay sales tax. In addition to not operating a brick and mortar store to save on that overhead (and passing that savings onto us), the sales tax is probably the second biggest boon to ordering off Amazon. Combined with free shipping over $25 and a moderately nice return policy, it’s clearly a giant in the online retail business for a reason. As it’s expanding into online streaming though, it’s collection is a bit sparse, especially what they can offer to Prime members for free. Netflix still has the better deal for price vis-à-vis selection. Thus, Netflix could have spun off Qwikster so that Amazon could buy the streaming portion of the business with fewer tax implications in terms of acquisition and in terms of having a nexus in states that could salivate at the thought of being able to tax it.
Secret Plan B: Sell Qwikster for CashOn the other hand, maybe Netflix is really looking forward and knows that streaming is coming to the masses before the rest of us see it. And for them to realize and jumpstart that future, they need to offer better selection. Right now, they’re hemorrhaging movies, TV shows, and subscribers. In short, they’re running low on cash and low on shiny things to attract people. Spinning off the DVD-by-mail business and then selling it to a competitor/buyer would give Netflix an influx of cash. With that big wad of cash, it can get the rights to more popular shows (even — gasp — exclusive rights!) to use in enticing new subscribers and keeping old ones satiated.
But alas, Netflix cancels Qwikster spin off. There was no method to their madness. This is disappointing because it really does mean that they’ve really lost their mojo over there in management. Whatever has happened or whoever has been advising them in the past 6 months needs to be stopped. They need to roll back to their classic Netflix way of doing things if the streaming & DVD-by-mail Netflix is more attuned to their customers. That, or they need to go for broke with either not-so-secret plan. Maybe the best news for them would be to stay out of the news for a while.