Netflix apologizes for snafu, renames DVD unit

September 19, 2011

Netflix CEO Reed Hastings acknowledged problems with the company's new pricing scheme

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Netflix CEO Reed Hastings, pictured at an August conference, acknowledged that he "messed up" the video giant's new pricing scheme and announced a rebranding of the DVD rental service which has been split from its online streaming unit.

Netflix's top executive acknowledged that he "messed up" the video giant's new pricing scheme and announced a rebranding of the DVD rental service which has been split from its online streaming unit.

Chief executive Reed Hastings made no change to the new pricing scheme, which resulted in a whopping price increase for many customers, but apologized for his handling of the move.

"I messed up. I owe everyone an explanation," Hastings said in a letter to subscribers posted on the website Sunday.

"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."

Netflix announced in July that online streaming and DVD-by-mail service that previously cost subscribers $10 per month will jump to $16 monthly.

can also opt to sign on for one service or the other for $8 a month.

Hastings said the DVD service would be renamed Qwikster "because it refers to quick delivery" and Netflix will be used for video streaming. Customers who get both will receive two separate charges.

He added that " 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."

"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," he added.

Netflix shares tumbled recently when its subscriber forecast for the United States for the third quarter was cut from 25 million to 24 million.

(c) 2011 AFP

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Skultch
Sep 19, 2011

Rank: not rated yet
I have poop for internets, so I do disc only, and now save money; so, no complaints from this guy.

That said, Qwikster is a dumb name. How is that in any way necessary? Sure, separate the corporate structure, but why a new name? When did Netflix start taking stupid pills?
caeman
Sep 19, 2011

Rank: 5 / 5 (2)
This is part of a future unspoken plan to make the two companies completely separate, I imagine, to make it easier to shut one down, or sell, or merge with a competitor.
krundoloss
Sep 19, 2011

Rank: not rated yet
I think Redbox is making DVD delivery obsolete. If I am as fast as possible, I might get 6-8 DVD's a month from Netflix. I could, for the same price, just stop by the redbox and get a DVD for $1 anytime I want. Looks like you have been beat out, Netflix! Dont Even mention Blockbuster Video, I will laugh!
parder_dade
Sep 19, 2011

Rank: not rated yet
It is amazing how arrogant & clueless people disregard the customer and wonder why they leave for other providers. Yea for Red Box, vote with your wallet! As far as Netfix streaming service, there are better ones out there.
Temple
Sep 19, 2011

Rank: 5 / 5 (3)
I suspect that netflix doesn't make nearly as much money on its DVD subscribers, so they were looking for a way to change that. Ultimately, they want them to pay for DVDs above and beyond the new streaming service. That's fair. People can vote with their wallets. I suspect though, that netflix will be happy to divest itself from its DVD service, and won't be sad to lose those small profit margins.

Consumers can't expect a business to continue offering a service if they don't want to. If there's enough demand, there will be rival businesses to pick up the slack. If there's not, then well, too bad.

The unfortunate part of all this is that there is a need that netflix DVD served that the streaming and even Redbox could not. The DVD catalog for Netflix was *huge*, with tons of content that is not available any place else. I suspect though that this was a niche market and sadly it may dry up.
Skultch
Sep 19, 2011

Rank: not rated yet
Good comments, guys. They probably will sell off the disc company. Who knows, maybe RedBox will buy so they can offer more services and a MUCH larger selection.

Man, I need to find out my roof mount idea will work. It sucks being in the 3 percent that can't get broadband.
Sparkygravity
Sep 19, 2011

Rank: 5 / 5 (1)
uh... I don't want to manage my movie/tv entertainment from two different sites. Netflix already put the hurt down, I accepted the price increase, but I don't want to mess with the logistics managing two websites. This just makes an already bad situation worse.
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