Broadcast all over social media and even sent to customers via email, Netflix spilled its plans to quietly spin off its DVD division into a self-contained subsidiary known as Qwikster. In doing so, Netflix CEO Reed Hastings is pushing forward a strategy to shield its cutting-edge media streaming business from a quickly graying DVD market.
Though Hastings didn’t explicitly mention this, it’s obvious that tracking, shipping, and handling physical discs is a big financial burden to Netflix. And once customers start abandoning DVDs with momentum, Qwikster price hikes will undoubtedly occur to balance costs (although many will remain latched on to DVDs the same way some folks are inexplicably married to AOL). In theory, these price hikes would not affect Netflix streaming-only customers, and Qwikster can eventually disappear at its own pace, similar to a dying leaf falling off a tree. The trunk simply says, “meh.”