Netflix has a Sinister Plot called Qwikster.
With DVD sales plummeting 20% year after year, the future is 100% online streaming.
Qwikster has a death sentence.
In 10 years not a single person is going to be getting DVDs-by-mail, not when they can have it all with instant streaming; on their TVs, PCs, Xboxes, iPhones, etc.
So what do you do?
Do you:
A) Keep a looser that’s not going to generate a profit, while at the same time incurring extra subscriber costs.
B) Separate the business into two divisions, with neither division able to file for bankruptcy without bringing the other one down with it.
C) Spin out a separate business called Qwikster, polish it off, and then sell it to a sucker (harsh, but realistic … as whoever gets into this business has an unrealistic model of the universe).
Netflix still faces big problems with costs of content deals (Starz) and premium content providers becoming competitors (HBO GO, MAXGO, etc).
I see Qwikster converting into a RedBox (local rental boxes in/next-to stores) and OnLive (”hosted” games) like business; with a slowly evaporating DVD-by-mail customer base.