Monday, September 19, 2011

So it has come to this...

Hello everyone! I'm taking this opportunity to drag out my soap box and share some of my own commentary on the latest in Netflix.

As you can see in an earlier post, I spoke about the new pricing and plans that Netflix unveiled much to the masses' absurdly negative reaction. Well, because of all the pouting and quite frankly, childish ranting about the plan increasing to a still WAY cheaper price than cable, about $17 (For one DVD at a time and Streaming), we now have a blog entry/email from the CEO, as follows:

Dear Kristin,

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 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 and 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 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.

That is the email version I received in my inbox this afternoon. So now because everyone was up in arms about the whole thing, Netflix is actually splitting their website in two separate entities. This is crazy. Maybe Netflix shouldn't listen to their customers so much, because the majority of them can't seem to give up 4 or 5 $4 Starbucks coffees to pay for their Netflix subscription. I wouldn't exactly call myself a misanthrope, but I just find that a whole lot of people should probably keep their opinions to themselves, or at least stop jumping to conclusions. That may be battle scars from working retail and hearing people vent their frustrations at complete strangers (us, retail workers) who I guess are seen as beneath them.

At the moment, I'm keeping my subscription until the end of the year when I'll be out of town for awhile (my account will be on hold so I don't have to pick out my movies all over again). I'll have to wait and see how this new separate sites for DVD's and streaming service works out. That may be my suggestion for everybody, basically freaking out over this: why don't you wait and see how it goes before you make a such a quick judgement about it?

By the way, Red Box SUCKS.


  1. I didn't really care much about the price increase - but I did hear on the news that they lost over a million customers in less than a month. I imagine it was probably mostly people who a) don't have Netflix going straight to the TV and b) who already had cable.

  2. That's pretty bad. I just don't get why people still have cable this day and age. I watch "Project Runway" online, the day after it airs. Yeah, there's some kool programming on cable, but most of it can be seen online. Maybe this is just in my particular situation.

    That's pretty terrible, about losing so many people. I still think people are flipping out over basically nothing. Yeah, the rate increase sucks, but it was bound to happen. Even with the backlash, the price is still the same increase which is what initially set everyone off. So maybe they couldn't afford to lower the price?