Netflix Backtracks on Qwikster...No Word on Video Game Rental

[Omegaice]

Yup, this dude is one arrogant SOB. And yes, the new company is called Qwikster...Comments? Rants? Raves? Please share...

SUNDAY, SEPTEMBER 18, 2011
An Explanation and Some Reflections

I messed up. I owe everyone 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. I’ll try to explain how this happened.

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) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.

When Netflix is evolving rapidly, however, I need to be extra-communicative. This is the key thing I got wrong.

In hindsight, I slid into arrogance based upon past success. We have done very well for a long time by steadily improving our service, without doing much CEO communication. Inside Netflix I say, “Actions speak louder than words,” and we should just keep improving our service.

But now I see that given the huge changes we have been recently making, I should have personally given a full justification to our members of why we are separating DVD and streaming, and charging for both. 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, plus lots of TV series. We want to advertise the breadth of our incredible DVD offering so that as many people as possible know it still exists, and it is a great option for those who want the huge and comprehensive selection on DVD. DVD by mail may not last forever, but we want it to last as long as possible.

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 feel we need to focus on rapid improvement as streaming technology and the market evolve, without having to maintain compatibility with our DVD by mail service.

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. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: 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, and now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. Another advantage of separate websites is simplicity for our members. Each website will be focused on just one thing (DVDs or streaming) and will be even easier to use. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated. So if you subscribe to both services, and if you need to change your credit card or email address, you would need to do it in two places. Similarly, if you rate or review a movie on Qwikster, it doesn’t show up on Netflix, and vice-versa.

There are no pricing changes (we’re done with that!). Members who subscribe to both services will have two entries on their credit card statements, one for Qwikster and one for Netflix. The total will be the same as the current charges.

Andy Rendich, who has been working on our DVD service for 12 years, and leading it for the last 4 years, will be the CEO of Qwikster. Andy and I made a short welcome video. (You’ll probably say we should avoid going into movie making after watching it.) We will let you know in a few weeks when the Qwikster.com website is up and ready. It is merely a renamed version of the Netflix DVD website, but with the addition of video games. You won’t have to do anything special if you subscribe to our DVD by mail service.

For me the Netflix red envelope has always been a source of joy. The new envelope is still that distinctive 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 the same for many of you. We’ll also return to marketing our DVD by mail service, with its amazing selection, now with the Qwikster brand.

Some members will likely feel that we shouldn’t split the businesses, and that we shouldn’t rename our DVD by mail service. Our view is with this split of the businesses, we will be better at streaming, and we will be better at DVD by mail. It is possible we are moving too fast – it is hard to say. But going forward, Qwikster will continue to run the best DVD by mail service ever, throughout the United States. Netflix will offer the best streaming service for TV shows and movies, hopefully on a global basis. The additional streaming content we have coming in the next few months is substantial, and we are always working to improve our service further.

I want to acknowledge and thank our many members that stuck 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

POSTED BY REED HASTINGS AT 8:59 PM

[Monkey]

All depends on the price for me. Gamefly is way too expensive for my gaming habits.

What I wish Netflix did is keep one site and just add video games to it. I don't want more websites I want less but with more content. Instead they are breaking up the services, this is a step backwards. Give me streaming, blu-ray's and video games at a fair price and I'll be happy as can be.

[SDG]

I droped them on the 7th of this month. Extra $20 in my pocket sorry honey, in your pocket.
May try Blockbuster out if they have more new movies.

[supersix4]

Originally Posted by omegaice

Yup, this dude is one arrogant SOB. And yes, the new company is called Qwikster...Comments? Rants? Raves? Please share...

lol he could call it greatestserviceinthehistoryoftheworld, but if he doesn't fix his crappy price boost (and lets be real netflix streaming has just now gotten worth the price with the additions they've made, but to up the price )

I hope they lose another 600k and then beg people to come back.

[Omegaice]

Originally Posted by Monkey

All depends on the price for me. Gamefly is way too expensive for my gaming habits.

What I wish Netflix did is keep one site and just add video games to it. I don't want more websites I want less but with more content. Instead they are breaking up the services, this is a step backwards. Give me streaming, blu-ray's and video games at a fair price and I'll be happy as can be.

I agree with you in regards to the cost of GameFly. I've been with Netflix for 4 years now & I can honestly say that I might leave. I used to believe that this company was good to go. I could stream media from my computer, PS3 & now Blu-ray & TV, and still receive a Blu-ray disc for $13 a month. But when the new pricing changes went to effect on September 1st, my same plan shot up to $20 a month! No thanks! I opted for the streaming only option for $8 a month. But the streaming selection is still no where as extensive as Amazon, Hulu or Vudu. I know I sound like I'm crying but damn give us a break!! Really, Qwikster??? Really??

[tarvis]

I was and am more than happy to pay more per month for Netflix. Assuming the increase turns into a wage increase for the people stuffing the dvds into the envelopes. Because that is a terrible job. Possibly wishful thinking.

[Omegaice]

Originally Posted by supersix4

lol he could call it greatestserviceinthehistoryoftheworld, but if he doesn't fix his crappy price boost (and lets be real netflix streaming has just now gotten worth the price with the additions they've made, but to up the price )

I hope they lose another 600k and then beg people to come back.

LOL!! I agree! But as we've all seen recently, some of the media companies are taking their business elsewhere, i.e. Showtime & Starz.

[Monkey]

Originally Posted by omegaice

I agree with you in regards to the cost of GameFly. I've been with Netflix for 4 years now & I can honestly say that I might leave. I used to believe that this company was good to go. I could stream media from my computer, PS3 & now Blu-ray & TV, and still receive a Blu-ray disc for $13 a month. But when the new pricing changes went to effect on September 1st, my same plan shot up to $20 a month! No thanks! I opted for the streaming only option for $8 a month. But the streaming selection is still no where as extensive as Amazon, Hulu or Vudu. I know I sound like I'm crying but damn give us a break!! Really, Qwikster??? Really??

I might have to give one of those a try. If Hulu+ has good streaming at a reasonable price maybe that is where I'll go. Or Vudu. Basically something my PS3 can do.

Frankly I don't use my comcast for TV at all, my kids simply watch Netflix videos and that is it.

No Starz would also be a huge loss for an already anemic selection on Netflix for what I want to watch (not my kids).

[Omegaice]

Originally Posted by tarvis

I was and am more than happy to pay more per month for Netflix. Assuming the increase turns into a wage increase for the people stuffing the dvds into the envelopes. Because that is a terrible job. Possibly wishful thinking.

You have a good heart but we all know that the price increase is only going to straight to the pockets of the higher management but maybe...

[Dutch Loven]

Originally Posted by Monkey

What I wish Netflix did is keep one site and just add video games to it. I don't want more websites I want less but with more content. Instead they are breaking up the services, this is a step backwards.

couldn't agree more. i don't really see why these services can't be housed under 1 site. oh well, i'll make due but it just seems slightly inconvenient.

[Omegaice]

Originally Posted by Dutch Loven

couldn't agree more. i don't really see why these services can't be housed under 1 site. oh well, i'll make due but it just seems slightly inconvenient.

You would think with today's networking capabilities & technology that they could pull this off & keep all traffic on one site. Maybe they just can't commit logistically to it?

[Rike255]

My guess is it has to do with making people pay for two distinct services instead of paying twice for one quasi service. It's probably an image thing.

In the end I'm glad I left Netflix, we don't even get DVD rentals here. Canadian stream selection is absolute junk too.

[Omegaice]

Originally Posted by Rike255

My guess is it has to do with making people pay for two distinct services instead of paying twice for one quasi service. It's probably an image thing.

In the end I'm glad I left Netflix, we don't even get DVD rentals here. Canadian stream selection is absolute junk too.

Boo...Sorry Bro.

[jsteinhauer]

I was a seven year subscriber and just recently cancelled, and one time I was up to eight at a time. I cut back to one at a time, sans Blu-ray, when they started charging me extra for the privilege of renting Blu-ray, whether I actually rented them or not. I mostly watched indies on DVD that never made Blu-ray, or oldies. They have since then been removing the less popular titles from their catalog and not replacing them with DVD's. The quality of their streaming content is very poor for me. I have only DSL and no other options where I live. I don't know how it is, if you have really fast internet access. Additionally, many of their streaming catalog titles still only stream in 4:3, and they don't have subtitles (an option my wife likes to use). Netflix no longer provides a quality service at a price that I find satisfactory.

My opinion of Netflix is NOT that they have been trying to respond to the market or fulfill needs of their customers (at least those like me), rather they seem to be trying to force the market in the direction they want to see it go. In essence, they have been moving to abandon their original customer base in favor of those who would rather use streaming content. If you are pleased with what they offer and are satisfied with the price, I'm sure you feel otherwise, and that's fine with me. Admittedly, most consumers are unfortunately less interested in the video and audio quality of the movies they watch than I.

[Rike255]

Originally Posted by omegaice

Boo...Sorry Bro.

Ya and with Blockbusters closing all around us there is basically no good rental service available anymore (Rogers are few and far between).

[Septimus Prime]

I was actually just considering cancelling my cable and going with Netflix, but now I think I'm just going to cancel my cable and go with nothing.

The best part of this news is reading all the comments from people all over the Internet. Everyone is pissed, and it's hilarious!

[Omegaice]

Originally Posted by Septimus Prime

I was actually just considering cancelling my cable and going with Netflix, but now I think I'm just going to cancel my cable and go with nothing.

The best part of this news is reading all the comments from people all over the Internet. Everyone is pissed, and it's hilarious!

LOL!! Yeah, it's a consensus feeling from consumers. I would've been ok had I not received that E-mail from Reed Hastings. It comes off to me as pretentious & soulless. Why didn't they just add video game rental to the current service? I've never thought I'd see a business shoot itself in the proverbial foot.

[Bizdady]

Redbox and Bitorrent... jk I kid I kid!

[Omegaice]

Originally Posted by Bizdady

Redbox and Bitorrent... jk I kid I kid!

LOL!! I love me some RedBox!!

[Snake_XRS]

I went down to the streaming-only plan, but worry that this deal is only going to get worse. Sony and Starz are not renewing their license, and I have yet to hear what they plan on adding to compensate the loss. The streaming selection was mostly bunk anyway, but at least their was a ton of crap to get lost in. Losing a million customers at $10+ per month is definitely bad news, so it will be interesting to see which way this goes.