Posted on 09/19/2011 5:56:25 AM PDT by 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
I was just in it for the DVDs. I cancelled months ago when they had the first price increase.
I just dropped the DVDs-by-mail. I’ll keep the streaming for now.
I’m so glad I got the same email. It reminded me to go cancel my subscription. 8.99 -> 16.98 in a year. No thanks.
The streaming content was already BAD enough but once the Starz shows disappear since their contract expired (and not renewed) it’s about to get pathetic.
Qwikster is about as bad a name as you can get. Sounds like a convenient store or something. Tip for Mr CEO maybe something like ‘MailFlix’ or something to at least stay in the same branding realm.
The company NEEDS to make a change. DVD's are dead. Streaming is the future. A GREAT service is trying to survive is a RAPIDLY changing market....and y'all just whine that you want it the way it always was.
Too friggin' BAD.... Drop their service. Find something better. Start your OWN business.
But, GADS man, stop the whining....you sound like a bunch of liberals who can't comprehend that business needs to MAKE MONEY and want them to subsidize YOUR way of life...
I’m so glad I got the same email. It reminded me to go cancel my subscription. 8.99 -> 16.98 in a year. No thanks.
The streaming content was already BAD enough but once the Starz shows disappear since their contract expired (and not renewed) it’s about to get pathetic.
Qwikster is about as bad a name as you can get. Sounds like a convenient store or something. Tip for Mr CEO maybe something like ‘MailFlix’ or something to at least stay in the same branding realm.
I love the streaming movies. I don’t even bother much with DVDs. But they need to get the best stuff on streaming to make that work. The took deadliest catch off, and I’m sure it was because the producers wanted to sell DVDs. A lot of good movies out that Netflix hasn’t gotten into streaming yet. Unless they fix that, it wont work.
Agreed, which is why netflix streaming business needs to focus on that side of the business, and the mail business can focus on areas where they can win, like the aforementioned rural areas.
I’m just saying, I think it’s a good move, although netflix and mailflix would’ve made more sense as names.
Why not NetlixDVD.com and NetflixNet.com or something like that? Qwikster? Sounds like Shyster.
Does this mean they've cancelled the recent price hike, that we will be paying the same for streaming + 1 DVD as we did last month, only now with a separate CC charge for each?
I’m can’t believe my fellow patriots on this site use services like Netflix. For the sake of convinience you’re willing to abandon American jobs such as Blockbuster, a company founded by Americans who made it their mission to provide entertainment to all Americans no matter how rural, and instead people like you are using Netflix, a company founded by foreigners who donatesa large amount to libs every election cycle and uses illigial mexicans in their warehouses to pack the DVDs into sleeves to mail them out to you.
Are we really so willing to sacrifice our values for a little bit of money and time?
Modest price increases are to be expected; Netflix's price increase (depending on the plan used) was in the neighborhood of 60%.
The cost of DVDs hasn't gone up.
The cost of postage has gone up maybe 2 or 3%.
That leaves the cost of streaming. If the cost of streaming has somehow gone up 60% (which is doubtful) then they need to do a better job explaining it.
Oh, and this was far from an apology. It was am “explaination” that the CEO gave with a smary smile on his face. It was an announcement of the split.
This is being done to save Netflix and nothing else.
The DVD rental industry has a few more years at most and everyone knows it. Qwikster is being set-up as a business that will die quietly in the near future.
Netflix will now be able to advertise that their most expensive plan is under $8 a month. Streaming is far more lucrative because it requires a much smaller staff, no packaging, no postage and the product never gets damaged, lost or worn-out.
Don’t forget that netflix is losing Starz in February.
/sarcasm
Not sure this is the brightest idea a company ever had. Are they just trying to ruin it?
Now, we will have to maintain two separate lists of titles on two separate websites.
The integration of the two on the current website made them easier to maintain.
Additionally, the Post Office may be closing our regional processing center (30 miles away) and moving processing to the state capitol (150 miles away). That would probably add an extra day to DVD turnaround time; thus reducing the number of monthly DVD deliveries by 3-4. If the PO also stops Saturday delivery, that would reduce the number even more — and make Red Box a better value.
The list of new DVD titles has been real great in recent months. Most of the titles in my DVD list are NOT ‘must see’ titles. I lived without mailed DVDs for decades. I can easily live without them again.
I don’t mind it. I prefer the streaming video, but I do rent DVD’s for the selection and I will continue to do so. (once I can get new releases and a better selection with the streaming, I’ll let the DVD’s go.)
I don’t understand why everyone is so upset about this. It’s basically the same thing, they’re just restructuring.
It doesn’t make sense to me why this it’s really necessary, but I’m not going to have a cow about it.
What perfect karmic symmetry in that screwer/screwee number inversion !
The thing is, what market? In our town *every* video store has shut down over the last five years. We have a tiny selection with a Red Box at McDonalds, but that’s it. For us, NetFlix is the only game left. They crushed everyone else.
Who hasn’t raised their prices lately? Have you been grocery shopping lately?
Had the CEO come out and explained to the customers about the studios and distributors causing them angst BEFORE the price increase, dollars to donuts, there wouldn’t have been as many people dropping. This is just frosting on the cake for those who were ticked already.
Netflix is in a death spiral. I will be surprised if they pull out at all.
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