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Comment by cop359 | Hacker News Reader

The Qwikster/Netflix thing is not at all simple

As far as I understand streaming and renting are two unrelated businesses. On the surface, there is no good reason they should be tied to each other.

It one of the very basics of organizing corporations: If there is no synergy between different divisions then you should spin the company (at least Russel Ackoff is behind me on this).

On the other hand, having these two divisions together allows them to hedge off each other. If rentals get unpopular and everyone starts streaming then the business as a whole isn't in the red. So there might be good reasons to keep them together.. but I don't think it's a no-brainer.

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On the back-end they are different -- but from the consumer's perspective renting and streaming are just different means to the same end: watching content.

If you have a movie you'd like to watch in mind -- regardless of whether it's available on instant or not -- it's a lot easier to just search on one website then be forced to go through two (and maintain two accounts). Not to mention that it makes sense to maintain user ratings for both instant and rented content in the same pool (for movie recommendations etc). I see a lot of synergy there.

I'm not so sure about them being so different on the backend. Sure, one half mails a lot of stuff, and the other has lots of servers, but wouldn't there be a lot of overlap in the "dealing with publishers and licensing" department?

No. And that's one of the problems. For DVD rentals, no licensing is required. All Netflix has to do is purchase the consumer DVDs and ship them to people who want them. Streaming, on the other hand, requires lots of complex negotiations with the rights-holders.

--and one reason the company gave for wanting to split in 2 is that content owners were insisting on counting DVD customers in calculations of royalties due.

i'm pretty sure i read somewhere that the overlap in the "dealing with licensing" department was the problem. publishers were using netflix's diversity as a mark against them in negotiations, and the streaming unit could get better deals if they didn't have to be responsible for the DVD unit.

> wouldn't there be a lot of overlap in the "dealing with publishers and licensing" department?

AFAIK rental and streaming rights are quite different (one is old-school simple model, another is a yucky "digital" that many publishers are scared of).

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