[NA] Netflix splits: Qwikster, games

TangoWhiskey

TangoWhiskey

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Interesting development... Got this in my email this morning. Netflix is splitting their operations into two companies, two websites. Netflix will handle the streaming side of the house; Qwikster will handle the DVD/BluRay side (and will add game rental for Wii / PS3 / Xbox 360 systems).

Dear Troy,

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.
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The comments at the end of the blog post are illuminating. A couple of examples, whose message is repeated in multiple comments:

You're continuing to make a classic mistake: thinking you're something different than what everyone believes you are. You're not a DVD company and a streaming company: you're where I go to watch movies. That's it. The future clearly is streaming, but by separating and charging more for access, you're wildly less valuable to me. I'll likely cancel. You haven't listened to customer feedback. You're delusional and you're lost.
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Hi there Reed! Old Netflix employee (from '00-'01) and LOOONGtime customer (since about '98, I think). With respect, I want to provide the following perspective: I was using the service when it was a la carte DVD rental by mail, and I remember when the subscription service debuted: my immediate reaction was "that's genius." I didn't have to have it explained to me, I didn't feel sad to see a la carte rental go when it eventually ended; it was just clear that this was the new model and lo, it was good. :)

I think this split feels VERY different, as it clearly does to you, too. One of the commenters below said it: Netflix isn't about the DVDs OR the streaming. It's about the movies.

Remember when we were changing the logo from the old purple reel to that ill-fated logo design we had for about a minute in late '00? It had the abstract impression of TV static and a rounded rectangle that seemed to symbolize the experience of watching on your TV. And it completely missed the mark. As the immediate successor identity pieces demonstrated, the ticket stub and the call to mind of the red movie theater curtains are far more what the customer experience is about: the pure unadulterated joy of watching the movies.

This split, to me, feels like the ill-fated logo. It's a deviation from what makes the Netflix experience so great. Netflix is about the movies, and to force the customer to decide whether they want to consume those movies via one format or another seems not only like a step backwards, but compared to the integrated service as it was a few months ago, counterintuitive, inconvenient, and disruptive.

The observation made in one of the comments below that a user who wants to continue to subscribe to both services will now have to search both sites is but one lucid example of how this is not in the service of customer experience. And I would not dare to lecture one of the CEOs I greatly respect, but rather remind you that a focus on customer experience, married with a sound business model, is the greatest determinant of success I know.

As a fan of both the service and your executive leadership, as a proud former employee, and as a shareholder, I truly hope you'll reconsider this move. Either way, thanks for taking the time to read and listen to your customers' feedback.
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I understand why they are splitting operations, from a logistic / management point of view... it's interesting to see the market perspective that users put out there... how they view Netflix, why they subscribe. "it's about the movies". Don't complicate how the users gain access to the movies, simply provide the service, and remain flexible on your delivery model as the technology changes. Will they "split the company" into a new service with every kind of delivery model?
 
I got this email this morning too and thought it was bizarre. I shouldn't even have netflix for all that I have movies sitting around for months on end.
 
I tried Netflix when they first opened shop and found that I don't watch as many movies as I thought I would.

When I do rent I'm more of a Redbox fan. You just can't beat $1 for a movie, and it seems like they're everywhere so it's easy to rent and return. And the best part is you can reserve the discs online so you know it will be available.
 
I've heard parents that travel a lot with kids in a car with an entertainment system are making Redbox rich! Rent a movie in one town, return it two hours later when you stop for potty break and get another. Rinse and repeat.
 
TangoWhiskey said:
I've heard parents that travel a lot with kids in a car with an entertainment system are making Redbox rich! Rent a movie in one town, return it two hours later when you stop for potty break and get another. Rinse and repeat.
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Brilliant! :D Except that my travels when my kids were little would have been ... rent 1 redbox movie in Denver, not quite finished by Cheyenne, WY.
... next Redbox option Cheyenne, WY on the return leg from Custer, SD ...
 
This looks like a clinical trial to see how best to kill a good company:
Raise your rates.
Don't tell anyone until the press gets it out.
Split up you company into pieces that don't talk to one another.
Next, are they going to start calling overweight people "fatties"?
 
Simplicity is better. Don't confuse your customers. When you make big, fundamental changes, that gives your customers a reason to rethink the alternatives.
-harry
 
Gerhardt said:
I tried Netflix when they first opened shop and found that I don't watch as many movies as I thought I would.
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Same here

When I do rent I'm more of a Redbox fan. You just can't beat $1 for a movie, and it seems like they're everywhere so it's easy to rent and return. And the best part is you can reserve the discs online so you know it will be available.
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Again same, and add the new Blockbuster kiosks to this. No screwing around with any recurring membership issues, and most of what I wish to watch on disk is low cost like the $1 Redbox. And most of the kiosks are at stores I'm visiting anyway.

If I want something "newer", then I just use my TiVO to stream from Amazon on demand.
 
Ive already dropped the DVD service for Netflix, as I don't want to pay for both, and Im not watching the amount of DVDs I thought. The G/F is streaming some TV shows right now... but once she's caught up to current episodes, we will probably drop the streaming as well.

iTunes for new episodes (speaking of which... NEW Top Gear UK tonight).

Netflix will probably go way of the dinosaur if they don't get new releases for Streaming.
 
The email cleverly avoided the question as to whether this Qwikster will be opt in or opt out for existing Netflix customers. I guess I don't have to expend too much energy in guessing :rolleyes:
 
I dropped the streaming as my DSL service doesn't seem to handle it well and we're usually more interested in the newer stuff anyway.
 
I hope this improves the streaming offerings. there are some really bad movies available on streaming
 
Wow. I guess I'm in the old school bunch. I still buy DVD's. We can't get high speed internet up at the house, we don't have sat or cable. And from what I can see on the motel room TV when we travel, I ain't missing much.
 
DeeG said:
Wow. I guess I'm in the old school bunch. I still buy DVD's. We can't get high speed internet up at the house, we don't have sat or cable. And from what I can see on the motel room TV when we travel, I ain't missing much.
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Probably not missing a thing except maybe making someone else rich.
I read the CEO of DirectTV made $44million last year. I'm looking at being outsourced/downsized/furlowed and we got CEOs making $44million.
There's a lot wrong with the world. There's one.
 
CEO is a flip-flopper...

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..which of course means he deserves a bigger bonus.
 

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silver-eagle said:
Probably not missing a thing except maybe making someone else rich.
I read the CEO of DirectTV made $44million last year. I'm looking at being outsourced/downsized/furlowed and we got CEOs making $44million.
There's a lot wrong with the world. There's one.
Click to expand...

Please airline pilots are a dime a dozen, they don't deserve to make anymore than the kid working at McDonalds... [total sarcasm] Gotta love capitalism aye, your only worth everything they can get out of you!

<---<^>--->
 
mikea said:
CEO is a flip-flopper...

attachment.php


..which of course means he deserves a bigger bonus.
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Are all the flaws of the world because of CEO pay levels? Please.

:rolleyes: X eleventy billion

Give it a rest for once.
 
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