Netflix about to make a big mistake.

netflix ^ | September 19, 2012 | -Reed Hastings, Co-Founder and CEO, Netflix

[Usagi_yo]

On Mon, Sep 19, 2011 at 7:49 AM, Reed Hastings, Co-Founder and CEO of Netflix wrote:

Dear Chris,

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 independently.

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.com and 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 thoughtlessly.

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.

Respectfully yours,

-Reed Hastings, Co-Founder and CEO, Netflix

p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments

[Usagi_yo]

The're going to take a well known and respected brand name and change it to a misspelled gimmicky name like Qwikster?

Dear netflix board of directors. Please call up your CEO Reed Hastings and fire him for being dumb.

[netmilsmom]

This is what happens when one supports Barbara Boxer.

[Safrguns]

Quickster????

You are right... they about to make a BIG mistake!

DUDE!... you order the DVDs ON THE NET!!! Why throw away one of the primary keys to your success????

2 different businesses??? that means 2 different accounts.

I for one will have only 1 account!... and that may mean you will lose both of mine.

[delapaz]

I also hate the name “Qwikster” but I respect the strategy. The DVD-by-mail system is dead man walking. Broadband streaming is the future. This should allow netflix to focus on what’s growing and be able to cannibalize their own business model before someone else does. See Blockbuster.

[Usagi_yo]

That’s funny because Barbara “Check Kiter” Boxer is pretty dumb and the fact that she keeps on getting re-elected makes me believe that a majority of California voters are equally dumb.

[ThePatriotsFlag]

Look at their stock since their announcement. No way I’m keeping both stream and dvd ... they priced themselves right out of the market, too bad. Amazing to see these “libs” trying to run a company. AOL buying Huffington ... (Stupid?) ... any IDIOT could know that wouldn’t work. Same kind of people running the admin economic team. All “ideas” and no results ... kind of like the global warming thing.

[netmilsmom]

Yup.

[Krankor]

He apologized, but the price hike is still in effect?

[listenhillary]

http://www.campaignmoney.com/political/contributions/reed-hastings.asp?cycle=08

Hastings, Reed
SANTA CRUZ, CA
95060 Netflix/Executive/Mgmt $3,000 10/20/2008 P PEOPLE FOR THE AMERICAN WAY VOTERS ALLIANCE
Hastings, Reed Mr.
SANTA CRUZ, CA
95060 Netflix/CEO $28,500 08/22/2008 P OBAMA VICTORY FUND - Democrat
HASTINGS, REED
SANTA CRUZ, CA
95060 NETFLIX.COM/PRESIDENT & CEO $28,500 11/14/2007 P DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE - Democrat
Hastings, Reed
SANTA CRUZ, CA
95060 Netflix Inc $2,100 12/11/2006 P CHRIS DODD FOR PRESIDENT INC - Democrat

[Mike Darancette]

Diluting your brand is never a good idea. And if you do don’t rebrand your original product.

[Usagi_yo]

Well, if they simply had to change the name, it should be something coherent like Netflix by Mail.

I believe most parts of the U.S are not infrastructured enough to sustain streaming video for the majority of their customers.

[netmilsmom]

>>This should allow netflix to focus on what’s growing and be able to cannibalize their own business model before someone else does<<

Or go out of business because they can’t properly communicate with their subscribers.

Anyone can stream movies.

[GRRRRR]

Just cancelled the DVD supply portion...going to streaming only for a savings of $16 per month...or a decrease in revenue to them of 60%.

[Cricket24]

Ok...I didn’t know this. My husband loves the dvd’s and I like the streaming. Maybe I’m mixed up but will we still get both? WHY can’t they leave everything alone????

[listenhillary]

http://www.campaignmoney.com/political/contributions/reed-hastings.asp?cycle=10

HASTINGS, REED
SANTA CRUZ, CA
95060 $-2,400 11/18/2010 G CITIZENS FOR ALAN KHAZEI - Democrat
HASTINGS, REED
SANTA CRUZ, CA
95060 $-2,400 11/18/2010 G CITIZENS FOR ALAN KHAZEI - Democrat
Hastings, Reed
SANTA CRUZ, CA
95060 Netflix $10,000 10/27/2010 P DEMOCRATIC STATE CENTRAL COMMITTEE OF CA - FEDERAL - Democrat
Hastings, Reed
SANTA CRUZ, CA
95060 Netflix/CEO $30,000 04/22/2010 P CALIFORNIA VICTORY 2010 - Democrat
HASTINGS, REED
SANTA CRUZ, CA
95060 $-2,400 01/17/2010 G CITIZENS FOR ALAN KHAZEI - Democrat
HASTINGS, REED
SANTA CRUZ, CA
95060 NETFLIX/EXECUTIVE $2,400 11/02/2009 G CITIZENS FOR ALAN KHAZEI - Democrat
HASTINGS, REED
SANTA CRUZ, CA
95060 NETFLIX/EXECUTIVE $2,400 11/01/2009 CITIZENS FOR ALAN KHAZEI - Democrat
HASTINGS, REED
SANTA CRUZ, CA
95060 NETFLIX/CEO $2,400 09/09/2009 P FRIENDS OF BARBARA BOXER - Democrat
HASTINGS, REED
SANTA CRUZ, CA
95060 NETFLIX/CEO $2,400 09/09/2009 G FRIENDS OF BARBARA BOXER - Democrat

[JaguarXKE]

Most companies that are great at something – like AOL dialup or Borders bookstores

Um, dude, Borders is going OUT OF BUSINESS. Oh, and we won't forget your snarky comments about Americans being self absorbed when asked how we "American's" might feel about a discount you were giving Canadians. Netflix CEO: American's self absorbed

[Dead Corpse]

Broadband streaming is only viable if you stream content people actually WANT to watch.

Chinese movies and re-runs of old tv shows aren’t going to cut it.

[Cricket24]

Just checked my email and I got the same email as above!

[american_ranger]

I checked my billing and realized that my $16.99 bill in January 2011 is now $23.49.

I am dropping these guys as soon as cable gets hooked up (Which will hopefully be this week.) I was a subscriber for over 8 years but am not going to accept a 36% price increase in one year.

[rwfromkansas]

I got over the pricing change, but NOW I have to go to different websites to access my DVD and streaming stuff?

That makes me mad.

I would have already left if it were not for some old TV shows I want on streaming. Just ridiculous.

They can have separate teams and still be on the same website and be called the same.