Challenging times for Netflix as it hives off DVD biz as Qwikster

MUMBAI: Netflix, the new challenger to old entertainment houses, is suddenly finding its business under attack from dropping subscribers, opposition from Hollywood content suppliers and a wobbly stock price movement.

The video rental company has hived off its DVD service to a separate website called Qwikster, while instant streaming of television shows and movies will continue with Netflix.

Netflix chief executive officer Reed Hastings said in a blog post that Netflix was changing the name of its DVD-by-mail business to Qwikster. This brand will also offer video games.

The move is significant as Hastings had earlier stated that the future lies in streaming. Some analysts conclude that Hastings could be preparing to sell the DVD unit while sticking to the higher-margin streaming business.

Netfllix, however, has seen a dramatic slowdown in subscribers after it increased its price to as high as 60 per cent, or $6 a month, for streaming and DVD rental service in combine. Customers are looking at cheaper options such as Coinstar Inc‘s Redbox kiosk.

Netflix has also been hurt by its failure to rope in movie-content provider Starz. The price hike has led customers to feel that they are being asked to pay for more at a time when the content is shrinking. Liberty Media‘s Starz has rights to popular titles like "Tangled" and "The Karate Kid" from Disney and Sony; the collapse of talks means it won‘t let Netflix stream those films when it expires in February.

Netflix will have access to a lone major studio, Paramount Pictures, for recent releases.

Competition in web video is rising from, Google Inc and Apple Inc. Blockbuster, now owned by Dish Network, is also readying to unveil plans for a streaming service on Friday.

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