In a posting on the Netflix Blog last night, CEO and Co-Founder Reed Hastings, told the world that their DVD by Mail service would be rebranded as Qwikster. He also alluded to the fact that they realize DVD by mail is not likely to be a long lasting business.
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”.
The streaming side of the company will still be called Netflix.
He also apologized for past “arrogance” on his part when it came to the way the company announced a price increase and split of the streaming/DVD service earlier this year.
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.
It seems subscribers spoke with their wallets after the way Netflix handled this shift a few months ago and Netflix is trying to do like other companies in similar situations and come out with their hat in their hands and take ownership for the poor communications.
I guess time will tell if this works out for Netflix and Qwikster.