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
25% is still a significant increase at one time.
And actually the cost of DVDs HAS gone up,
Can you document that? I don't doubt you, but I haven't noticed any increase in DVD prices, every new release is usually between $15 and $20 at Walmart or Target and then comes down in a couple months - these prices have been pretty consistent for several years.
and the cost of postage has gone up over 25% since the company started,
However, this is not the first price increase that they have had.
and the cost of their licensing for the streaming content has nearly quadrupled in the last year.
I'll grant them that, but they need to do a better job explaining this and how it has increased their cost per subscriber.
I've been on the 3 movies at a time for years and I guess my cost went up 25%. I really don't care because it's just not that much money, but I can see why a lot of people do care.
I don’t see any smarm in what he said. That’s more of people just whining for the sake of hearing themselves. He put out the basic facts, they were real, and readily available to all, anybody that doesn’t like them has an issue with reality, not with him. He didn’t puff up his chest, he didn’t say anything along the lines of what you say, that all came from you none of it from him.
People that don’t like the costs should be complaining about the content providers, they’re the guys that pushed their license fees over the 2 billion mark.
That's my guess too.
DVDs are going to be obsolete in a few years and everyone knows it.
The future is streaming and they want to associate the Netflix name with the business that survives.
Streaming is far more profitable, the only thing really holding it back is that not everything is available to stream (including a lot of older movies).
25% is large as a percentage, but it’s 4 bucks. It’s the price of 1 crappy fastfood lunch, and only if you live entirely on the value menu.
You just documented it yourself. Every new release is between $15 and $20 at Target, 3 years ago they were mostly $12.99 and $13.99. And that’s OUR price, Netflix is a renter, they legally can’t be buying those for rent (just look at the blurb in the warning screen when you put a DVD in), they have to buy the rental license DVDs which are generally 3 to 5 times as much as we pay. Plus of course they’ve got the BluRay business, which generally run $5 to $10 more than DVD (for us, again multiply by 3 to 5 for rentals).
Again with the postage Netflix has probably had a LARGER increase. Because they’re shipping DVDs their envelopes are a non-standard size, their base postage is more. Now they do their own sorting to get the bulk rate going out, but they don’t get bulk rate on the return.
I don’t see why Netflix should have to explain that. It’s relatively easy to find information that’s been out for MONTHS before they announced the price hike that their streaming license fees went from around $700 million a year to over $2.5 billion. Anybody using the streaming service is on the internet, and so is this information. Anybody that can’t see how that increased Netflix’s cost per subscriber won’t pay attention if Netflix tells them.
I know there’s plenty of folks with tight money situations, but even in this time period $4 a month just isn’t that much money. It’s a touch over a gallon of gas. People just like to complain, there was an article that hit FR this weekend about the changes in society we’re seeing from the internet, about half their list can be seen in the discussions about Netflix’s rather minor price hike.
They’re spinning off the DVD division in order to kill it.
It has 18-24 months to live. Tops.
Perhaps you haven’t paid much attention to what he has said up until this point. He’s insulted Americans and has even admitted he was arrogant.
Have you noticed the stock in the company has dropped like a stone? You see people whining. I see people who are dissatisfied with customer relations pulling their cash.
None of us OWE anything to Netflix or any other entertainment company. They have to give us a service we like. Not many people liked what this CEO did. So they dropped. If he had handled it correctly, he would be in better shape.
Look, I’m sick of a lot of things. I’m sick of libs, I’m sick of RINOs, I’m sick of union thugs, I’m sick of ghetto thugs, I’m sick of RATs stomping on the face of Lady Liberty, I’m sick of muzzies, but the one thing I’m most sick of is so called real American patriots who profess to want to make this coutty great but then when it cones down to their wallets will throw us under the bus to save a few bucks.
A completely different issue, and frankly foolishly and deliberately misread by most.
The stock market is all about emotions these days. So it’s still just people whining.
Who said anything about owe? That’s you reading into things.
I don’t think there’s anything he could have done differently. There was a major whine fest the first time they had a price hike too, that one was so foolishly epic they actually undid the price hike. And that one was just a buck for all plans. The situation was established then, any price hike by them was guaranteed to result in a bunch of silliness.
>>I don’t see why Netflix should have to explain that<<
Seriously?
You’ve never run a business, have you?
This is a service. If they want to keep customers, they keep them happy. THAT is why Netflix needs to explain that.
The buy American motto has never worked when the American product is inferior in every way. You can’t fault the consumer for buying the better product, and for this discussion it’s netflix.
Also, I can’t find any evidence that Netflix has used illegal labor. Are you making this up as you go along?
Well that’s too bad for you. Because out here in a free capitalist society we get to make our own choices on how we spend our money based on our own goals. Like somebody else pointed out to you Blockbuster is owned by folks who donate to libs too, so patronizing them instead of Netflix doesn’t really change things, except then I’d be having to put up with Blockbuster’s higher prices, unwillingness to provide movies more than 5 years old, and pimply teenage jerks behind the counter. I’ve made my capitalistic decision based on proper application of American values, and if that makes you sick that’s not my problem. But because I’m a nice guy I hope your bathroom floor is comfy for you in your time of sickness.
Read the rest of the sentence. The “explanation” you wanted is information that’s been readily available for MONTHS before the price hike was announced. Meanwhile out here in reality prices get changed all the time without anybody telling me. It’s simply stupid to think Netflix owes explanations for normal business behavior that not one single other company on the planet explains. My cable company doesn’t explain price hikes, my gas station doesn’t, my restaurant doesn’t, Target doesn’t, my grocery store doesn’t, NOBODY does. But some how Netflix is supposed to? That’s silly, and you’re smart enough to know that.
I’ve personally met a few of the MN-based freepers in the area so any accusations of me being a plant is moot. You may go back your daily regimen of huffing gasoline.
Now it turns out that my "personalized" letter was one of many. I have been hoodwinked by a mail merge scheme!
And how is the American product supposed to improve with no income? It’s bad enough our government is killing American business, do we as consumers have to do it as well? Can’t we stand behind something. I’ve seen no evidence that Blockbuster has donated to libs, and I’ve already said, do you think Americans are going to pack dvds into envelopes for 50 cents an hour? Wake up. And you’re suprised the mainstreammedia isnt reporting on illegal labor in this country? Don’t make me laugh.
And how is the American product supposed to improve with no income? It’s bad enough our government is killing American business, do we as consumers have to do it as well? Can’t we stand behind something. I’ve seen no evidence that Blockbuster has donated to libs, and I’ve already said, do you think Americans are going to pack dvds into envelopes for 50 cents an hour? Wake up. And you’re suprised the mainstreammedia isnt reporting on illegal labor in this country? Don’t make me laugh.
It’s hard on those sites to find working links though, so I preferred the convenience of legally watching on Netflix.
***AmazonPrime is 79.00 a year and the streaming is free.***
Yes, but the selection you get with AP isn’t good. To get the shows that I actually want to watch would cost a lot of money.
According to the article that I read a few days ago on yahoo, this moron acutally thought that the amount of new revenue raise by the price increase would offset the few that would leave.
I received the email this morning as well, and I felt it had that arrogant liberal tone - "you must not have understood me the first time so I will explain again, s-l-o-w-l-y". Bah.
At $20/month, I still think that Netflix is a great entertainment value, so I won't drop the service now. But I am concerned less about the service split than I am about the content loss. I really don't give a hoot HOW I receive the content, as long as the content I wish to view is available. Every decrease in content choice is going to result in my examining my options.
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