“I messed up. I owe everyone an explanation.” Netflix CEO Reed Hastings began his latest blog post, “An Explanation and Some Reflections,” apologizing for his lack of communication to the public during the price hike; however, he then continues to introduce a new change: Netflix is splitting into Qwikster (DVD by mail) and Netflix (video streaming).
He apologizes for lacking “respect and humility in the way (they) announced the separation of DVD and streaming, and the price changes.”
He continues to give an explanation that is months overdue: “So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently.”
Then he announces the next, probably inevitable, change.
Netflix will be renaming their DVD by mail service to “Qwikster” which in all honesty is not a bad idea. He states, “Our view is with this split of the businesses, we will be better at streaming, and we will be better at DVD by mail.”
While many people are angry at this fact, the decision makes some sense; however, the nature of the fissure is more extreme than a marketing effort and internal restructure, they will basically be two separate companies.
Netflix and Qwikster will have separate websites, billing, and, probably the most irritating of all, the rating and review systems will not be synced. If you want to change your credit card, rate a movie, or add a movie to your queue, you will have to do it on both sites.
First, while I understand why they split the two services and why prices went up, why did they not announce all the changes at once, instead of apologizing for some changes and then make more changes DURING the apology?
There is no reason to shoot your left foot and try to stop the bleeding, but then shoot your right foot in the process. Didn’t it hurt the first time! He cheapened the apology because it seems like he is trying to make you feel better so his next sin will not feel so bad.
Second, why are the systems completely separately? Relieving some of the burden/annoyance on the consumer would have gone a long way to healing Netflix’s image or it would at least soften the blow of the second shot to the foot.
However, one of the saving graces in the post was Hasting’s announcement that the newly created Qwikster will offer video games by mail, which is a market dominated by Gamefly. Hopefully, Qwikster will be offering both movies and video games at a price lower than Gamefly’s $16 to $37 monthly fees.
Since the “apology,” Netflix took a second dip on Wall Street and may lose even more subscribers. Also, on the heels of the post, Dish Network is announced a press conference for September 23rd where they will reveal plans for Blockbuster’s own video streaming venture.
Even though Netflix signed Discovery Communications to a two-year video streaming deal yesterday, this week has to be a considered major loss.