Netflix Killed DVDs. Now It's Killing Streaming.
Date Published
In September 2011, Netflix announced that its DVD-by-mail service would be spun off as a standalone brand called Qwikster. With the split, the price for DVD and streaming subscriptions jumped from $9.99 to $15.98, a 60% increase. We now managed two different accounts, on two separate websites with separate billing.
Immediate Fallout
Myself and 600,000+ subscribers canceled within weeks, too lazy to deal with multiple subscriptions.
By the end of 2011, Netflix had shed around 1 million users which was irrc 4% of the total userbase.
I had lost around $10,000 from my pick in July at 265 to 140 by October.
Netflix's Response
By early October, Netflix acknowledged our exodus:
“Consumers value the simplicity Netflix has always offered and we respect that… We moved too quickly,” CEO Reed Hastings wrote .
He followed up with a short apology video alongside Operations Chief Andy Rendich. He announced how they were officially abandoned Qwikster, merging DVD and streaming back into one service—though the price increase remained in place .
Core Lessons
This Was a Push Toward Streaming
Netflix made DVDs harder and streaming easier. The split forced people to rethink what's better—and streaming won.
Pain Points Drive Change
The hassle and price jump weren’t mistakes; they tore users away from DVDs and toward the future.
Short-Term Loss, Long-Term Win
Losing DVD subscribers was the cost of accelerating streaming.
Outrage Was Part of the Plan
Backlash meant people noticed—and ultimately, most stuck with streaming anyway.
My thoughts
The Qwikster fiasco wasn’t really a marketing blunder more than it was a move to phase out DVDs. Netflix forced people to pay more for DVD and streaming together. By splitting them up, then charging more for just streaming, they made everyone realize that streaming was the future and DVDs were already old technology.
Netflix spent millions of dollars, not to maintain DVD revenue but rather to demonstrate how streaming was the natural evolution of the DVD for watching movies.