The price hike was pretty large - 60% for the low end subscription. Yeah people were complaining, but many realized it was still a good deal since it gave you access to both unlimited DVDs and streaming.
However, then throw in the announcement that Netflix is potentially losing the rights to stream many studios' movies - including Disney's works - due to that contract expiring, and suddenly the price hike looks a lot less appealing. After all, why should you pay MORE money for a REDUCTION in service?
As if that weren't bad enough, then came the Netflix/Kwikster announcement. I don't know who came up with this idea, but they should have been fired.
This split means subscribers who want both DVDs and streaming will need 2 separate accounts. Netflix will do the streaming, and Kwikster will do the DVDs. 2 separate companies. 2 separate billing departments. 2 separate queues to manage.
It also means you no longer have to stick with Netflix of Kwikster for both services. You could, for instance, choose a different vendor for your streaming and/or DVD needs as opposed to just using Netflix to fulfill both of them. That's the really dumb part. While Netflix was not the quickest to get DVDs, nor does it have the largest streaming library, it was the only company to offer BOTH. While it may make sense to eventually split, it's too soon in my opinion and the split severely weakens the positioning of the two new companies.
Netflix (streaming) - Its library can't compare to other streaming sites which are either FREE (Hulu, numerous networks' sites) or contain MORE CONTENT (Hulu Plus, iTunes) Also, many popular titles are available for streaming at all (e.g. not-recent TV shows) which may drive people away from streaming entirely. I mean why pay for a service you aren't using or can get the same material from somewhere else...like Qwikster?
Qwikster (DVDs) - While Qwikster will benefit from the huge library Netflix accumulated over the years, there are other DVD rental services available - namely Blockbuster and Redbox. Quite frankly, this split may end up saving Blockbuster from utter destruction. Blockbuster not only has DVDs-by-mail, but allows you to trade them in at any brick&mortar store of theirs (assuming you still have one near you) AND ALSO carries video games by-mail AND ALSO has their rental kiosks like Rebox. While there was a mention that Qwikster will also start carrying video games, it really remains to be seen how they are going to be able to compete with Blockbuster, or Redbox. Redbox, meanwhile, may only carry fairly recent movies and now, games but at $1/night the price is hard to beat. At $16/mo, that's up to 16 separate movie rentals. Who watches that many movies in a single month? Most people may watch 1, maybe 2 a week, at best? That makes Redbox a far better deal for those subscribers.
Netflix's CEO mistakenly thinks that the new Netflix+Kwikster can be greater than the sum of its parts and that's just not the case. Netflix's CEO also feels DVD (and blu-ray) are old and outdated technology and that's also just not the case. There are quite large segments of the population that do not have access to the sort of high speed internet connections required for streaming - but they DO have at least 1 DVD player. Even the majority of people who DO have high speed internet connections are under pretty stringent bandwidth quotas which will make it quite difficult, if not impossible, to actually get their money's worth from a streaming-only subscription.
Honestly, I think this decision of Netflix's will go down in history as one of the greatest blunders in business, right alongside Bill Gates' declaration that the internet was "just a fad".
There's a reason why Netflix's stock has been dropping like a stone ever since...