Bold move by Netflix. I like bold moves, kudos for that.
But it’s still a disaster. What Mr. Hastings simply isn’t allowing for is
that streaming just isn’t there yet. The choices are too few. Sure, the
website is awful to use, the mobile players are incomprehensible, but the
real flaw is the selection.
But I could overlook that because I too, like Hastings believe this is the
future. But sometimes the future is awkward and needs a little kick. And
having that old-school DVD around was a safety blanket. And it worked, I
basically paid $3/month to have the same DVD sitting around my house in case
I ever wanted it. Netflix has now asked me to examine my safety blanket and
I’ve found it wanting.
Begin forwarded message:
From: “Reed Hastings, Co-Founder and CEO of Netflix” email@example.com
Date: September 18, 2011 23:33:41 PDT
Subject: An Explanation and Some Reflections
I messed up. I owe you an explanation.
It is clear from the feedback over the past two months that many members
felt we lacked respect and humility in the way we announced the separation
of DVD and streaming and the price changes. That was certainly not our
intent, and I offer my sincere apology. Let me explain what we are doing.
For the past five years, my greatest fear at Netflix has been that we
wouldn’t make the leap from success in DVDs to success in streaming. Most
companies that are great at something – like AOL dialup or Borders
bookstores – do not become great at new things people want (streaming for
us). So we moved quickly into streaming, but I should have personally given
you a full explanation of why we are splitting the services and thereby
increasing prices. It wouldn’t have changed the price increase, but it would
have been the right thing to do.
So here is what we are doing and why.
Many members love our DVD service, as I do, because nearly every movie ever
made is published on DVD. DVD is a great option for those who want the huge
and comprehensive selection of movies.
I also love our streaming service because it is integrated into my TV, and I
can watch anytime I want. The benefits of our streaming service are really
quite different from the benefits of DVD by mail. We need to focus on rapid
improvement as streaming technology and the market evolves, without
maintaining compatibility with our DVD by mail service.
So we realized that streaming and DVD by mail are really becoming two
different businesses, with very different cost structures, that need to be
marketed differently, and we need to let each grow and operate
It’s hard to write this after over 10 years of mailing DVDs with pride, but
we think it is necessary: In a few weeks, we will rename our DVD by mail
service to “Qwikster”. We chose the name Qwikster because it refers to quick
delivery. We will keep the name “Netflix” for streaming.
Qwikster will be the same website and DVD service that everyone is used to.
It is just a new name, and DVD members will go to qwikster.com to access
their DVD queues and choose movies. One improvement we will make at launch
is to add a video games upgrade option, similar to our upgrade option for
Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members
have been asking for video games for many years, but now that DVD by mail
has its own team, we are finally getting it done. Other improvements will
follow. A negative of the renaming and separation is that the Qwikster.comand
Netflix.com websites will not be integrated.
There are no pricing changes (we’re done with that!). If you subscribe to
both services you will have two entries on your credit card statement, one
for Qwikster and one for Netflix. The total will be the same as your current
charges. We will let you know in a few weeks when the Qwikster.com website
is up and ready.
For me the Netflix red envelope has always been a source of joy. The new
envelope is still that lovely red, but now it will have a Qwikster logo. I
know that logo will grow on me over time, but still, it is hard. I imagine
it will be similar for many of you.
I want to acknowledge and thank you for sticking with us, and to apologize
again to those members, both current and former, who felt we treated them
Both the Qwikster and Netflix teams will work hard to regain your trust. We
know it will not be overnight. Actions speak louder than words. But words
help people to understand actions.
-Reed Hastings, Co-Founder and CEO, Netflix
p.s. I have a slightly longer explanation along with a video posted on our
where you can also post comments.
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