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
Throwing out accusations like that, Delano ain’t going to last long around here.
>>The “explanation” you wanted is information that’s been readily available for MONTHS before the price hike was announced. <<
You’re not getting it.
Not everyone is a news junkie or an internet junkie for that matter.
I don’t really care how smart you think I am or if you think I’m dumb as a box of rocks. The truth is, if a business wants to keep customers it makes them happy. Netflix didn’t. They were arrogant (by the CEOs own admission) and didn’t meet the needs of the customers. If your restaurant or your grocery store boosted their prices by 60% in one day, they would lose customers. Netflix did just that and could have tempered it by explaining the cost. They didn’t. They left their customers to do the research. Bad move. They lose customers.
We here in America have the right to buy what we want. People don’t like arrogance.
I’m smart enough to know when a business model doesn’t work. I have a degree in business management. This one didn’t work and it won’t work in the future. They soiled their brand. It’s a pity.
I think I shall bow out now. I thought this was a discussion site for all things true and American. Looks like I’d better be careful lest I run the risk of upsetting someone with the truth!
50 cents an hour? Where are you getting this information? Make it up as you go along is not going to fly here. It never has, and it never will.
It’s a secondary cable company
No I’m getting it just fine. People like to whine. No company owes an explanation for a price hike, and 99% of companies never give one. It’s really simple, if a company decides they need/ want to change their prices they do it, if they have a relationship with customers that involves automatic payment they warn the customers first so people don’t suddenly see more money coming out of the account, if there is no automatic payment they don’t you’ll find out when you see the bill, if the new price isn’t equitable to you you end your relationship with them, if it’s OK you stay.
That’s how all the other companies do it. Think Netflix should somehow sit down with their 23 million customers and explain the basics of capitalism to them is silly. And if you have a degree in business management then you already know everything I said, but you’re being emotional. I’m being logical. I run into a price increase probably every week with one transaction or another, not a damn one comes with even a word of explanation.
Spare me the martyrdom. You called another use Pedro, claimed that he's a paid democrat operative who's bringing his illegal wives (plural) and children over from Mexico. If that passes for the truth in your world, then you indeed will not last here.
Total insanity to rename the netflix website. That’s like craigslist renaming itself to joeslist.com and using the old cragislist.com website as a porn site. How well do you think that would work out? I can’t wait to see the chaos that ensues from renaming he netflix website. At a minimum, it means all the FORMER subscribers that have inactive accounts and won’t be getting a stupid email announcing the change will be very confused should they ever attempt to go back to netflix.
The bad ideas at netflix just never stop. First drive off a whole lot of your customers with massive price hikes. Then drive off the rest my making it impossible to find your store. Looks like Reed Hastings has subscribed to the Charlie Sheen & Barrack Obama School of Business Management business model.
Exactly. It scares me how stupid the marketing people are over there.
The website isn’t being renamed. The streaming service will remain at www.netflix.com. What’s changed is the DVD site, which is obviously temporary, until Netflix can dump the physical media altogether. Physical media is on its way out. Blockbuster realized this too late, which is why it is where it is today.
With a pathetic selection.
Do have a Redbox nearby. Nice to have and cheap (free if you use the codes), but I still like Netflix because it has most movies.
Blockbuster flat closed here (a city of over 100,000 people by the way), so the only other option for a movie that isn’t in Redbox is instead to go to Hastings (lol!) or Netflix.
Redbox has an extremely small selection, and while I like they have the new releases Netflix doesn’t on streaming, the thing is, they don’t have anything older.
That’s where Netflix comes in handy on streaming or via DVD.
I don’t understand those who proclaim the DVD dead when no streaming service has enough content to really do this, not Netflix or Amazon Prime.
There are tons of great movies and TV shows that you simply can’t get without Netflix by mail. If I want my obscure 80s movie, Redbox won’t have it. Netflix will, though again probably only via DVD.
I hate paying more and NOW having to use a separate website, but it’s hard to give all that up and then limit myself to only what Redbox has etc.
>>No company owes an explanation for a price hike, and 99% of companies never give one<<
Customers are not owed an explanation.
Netflix is not owed any loyalty.
In fact, if a company does not explain to it’s customers when a price hike is in order, then those customers complain to high heaven and the company name is ruined, is it the customer’s fault?
A good business model keeps the customers happy. Otherwise one has no customers. It’s very simple and that my FRiend is free market capitalism. Netflix assumed. If they want to have their brand recognition come back to being positive, they better get on the ball or they will lose their customers and won’t be able to sell their brand anywhere. No matter how good you think the monthly fee is.
Those who are seeing their Netflix stock tank, need to be miffed with the CEO, not the customers.
I wonder if the people at Netflix ever heard of the company Quixtar.
Quixtar is a mult-level marketing brand of dubious reputation from Amway.
The names sound extremely similar. Netflix might be looking at a legal challenge in the future. Or, they could have their image tarnished by the reputation of the multi-level marketing outfit of similar sounding name.
-PJ
That used to be true. Today a small minority of rural customers face that with underserved DSL, during peak hours. Outside of those rural areas, connections with staggering bandwidth between 20mbs and 100mbs are cheap, and the infrastructure is there to handle even the highest capacities of users online with no throttling. Hell, I just upgraded and got a new package with 150mbs down and 35mps up. I could conceivably stream VUDU's highest quality (the highest in the business) movies to 16 different televisions in the house, and still have enough bandwidth left over to FReep.
Or put another way: Even if so many users were on that I reduced to 5% capacity, I could still watch HD Netflix without a slowdown. Theoretical numbers aside, it's not unusual here to have 4 televisions streaming movies from the net, 2 computers playing online games and still 2 more computers surfing the net. All without a any slowdowns that are discernible to the users.
I agree. Personally I could care less, but I do understand why a lot of people are angry.
Actually, for people who just get DVDs I think the cost actually went down a bit.
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.
My memory of that is different. I seem to remember DVDs being MORE expensive ten or twelve years ago when DVDs were first coming out.
Netflix has contract rates for both what they ship and what comes back to them.
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 agree with you, but Netflix should have done a better job explaining all of this.
Btw, Where did you get the information that Netflix is foreign? Netflix was founded by Marc Randolph and Reed Hastings, in Scott’s Valley, California. Netflix went public in 2002, and today is headquartered in Los Gatos, California. Reed is definitely American born, and it would seem that Marc is as well given his educational history, even though I cannot confirm a place of a birth.
So, in conclusion here. Despite your protests about the truth, you wouldn’t know the truth if it bit you.
Why not take a deep breath, pour yourself a cup of decaf, shine that Master of ALL Things plaque on your wall, and chill.
I'm considering dropping cable for Netflix. Even with a "premium" Netflix account, I'd still save a bundle.
I'd just need to figure out something for sports. I live for football in the fall and hockey in the winter. Mrs WBill is a college basketball junkie. Our basic cable package, while expensive, carries 6 or 8 sports channels, so we can get our "fix".
Have you given the library a try for older movies? Or if you check on Amazon, try their sellers. Many DVDs are going cheap there.
As for Amazon having a small selection, it’s just beginning. When one has had Netflix streaming for years, there’s not tons left to watch anyway.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.