Imagine my surprise this morning when I got an email from Reed Hastings, the CEO of Netflix. I suppose you might assume that we're such a popular online video website, that the CEOs of major video companies email me all the time, but I can assure you that it's exceedingly rare. So why did Hastings email me and all the other Netflix members? To apologize... and to tell me he's carving his business up into two separate entities.
The Netflix Apology
The first part of the letter from Hastings involves an apology for the many moves the company has made in recent months that angered a lot of customers. Here it is, in his own words:
"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."
Netflix DVD Service Getting Spun Off To Become Qwikster
Netflix is officially splitting themselves down the middle. In a few weeks time, the DVD-by-mail service offered by Netflix will be renamed as Qwikster, which Hasting says speaks to the quick delivery of the DVDs. The streaming service will continue to be called Netflix.
There's an Xbox in the picture because Qwikster's launch will also bring video game discs to the DVD-by-mail service, which ought to make a lot of people (like Christophor) very happy.
Other notes you need to know about the business shift:
- The Qwikster and Netflix websites will not be integrated.
- The pricing will all stay the same. If you are a subscriber to both services, you'll start seeing two charges on your credit card statement instead of one, as the DVD Qwikster fees will be separated from the Netflix streaming fees.
- That classic red Netflix DVD envelope will remain, but it'll swap out the Qwikster logo for the Netflix one.
Is Qwikster A Good Move?
Judging from the comments on Mr. Hastings' blog post this morning, the early reaction is quite negative. Most every comment I've seen so far is negative--there are over 10,000 comments. The YouTube comments on the apology video are even worse. Some users are calling the apology weak, while others are upset with perceived arrogance on the part of Hastings.
It makes sense, really. For customers of both services, such as myself, this move just means more work for us. We now have to manage our queues at two separate websites, where we used to be able to do both in one location.
Which makes me wonder why this move is being made at all if it's not with the ultimate intention of selling off Qwikster and focusing on streaming alone. At the very least, they're hoping to unbrand Netflix as a DVD service... at most, they're planning to get out of DVD's altogether and this is just phase one.
Either way, it's just another in a long line of moves this summer that, regardless of Netflix's intentions, have angered users. In fact, I'm thinking you might see even more mass exodus after this announcement, and even more stock trouble for Netflix.
It can't be an easy position for Netflix to be in, to realize that your core business is outdated and dying and you need to transition to something new. But it certainly seems like Netflix has stumbled yet again in their attempts to keep customers happy throughout that transition.