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What Netflix Could Have Said This Week

367 points by barredo 15y ago

griffinalliance 15y ago
I think they renamed the DVD service so that it allows them the flexibility to sell it off at a later stage, I dont see anyone mentioning this but it is quite common for businesses to sell parts of the business to gain cash to pump into their future expansions. In this case it makes sense to put 100% into streaming.
- wccrawford 15y ago
  When they split the revenue without having a 'combined plan' discount, I was pretty sure the DVD half was going to die. They were just planning for it. My theory is that they are going to sell it before it stops being profitable... But keeping it as a separate company allows them to let it die without it taking the whole thing down, if worst comes to worst.
- joemysterio 15y ago
  I agree. They had to know they'd confuse and alienate people by changing the name of the service _and_ creating an whole new website for people to figure out. But it does allow them to extract the highest value should they sell it off later (and they will). With plans to sell there was only two things that would have been even more bone-headed than what they did: :a => "Sell it as Netflix DVD (or something like that) and have two companies named Netflix running around." :b => "Sell it and force the acquiring company to change the name, in which case they would have to accept a huge discount on the value of the business."
sbkirk 15y ago
I prefer the original. I got the email as a customer and felt like it did a decent job for what it was trying to do.
dave1619 15y ago
This letter is genius. If Netflix had sent it out I think it would have averted the entire crisis.
- tyree732 15y ago
  I don't think any of the serious complains about the letter had to do with the new name or the tone in which it was delivered. I don't think anyone would cancel their service over the name Qwikster or because the CEO is a jerk. The real complaints dealt with the separation of the services and thus the separations of the ratings system and of queue management. This letter does not address either of those issues, and thus would fix nothing.
  - Elfan 15y ago
    The fake letter doesn't separate them: > Members can log into both sites using the same login. This will allow streaming-only members to add DVD by mail, and DVD-only members to upgrade to streaming, at any time. The websites, however, will remain separate, so that we can start giving these different worlds the unique attention they deserve.
    - tyree732 15y ago
      > The websites, however, will remain separate, so that we can start giving these different worlds the unique attention they deserve. Sounds like they are being separated to me.
brown9-2 15y ago
It's not just the tone of the email or the new name that bugs people - it's the complete separation of their sites, pretending that the DVD-by-mail site can't communicate with the streaming-only site, etc. People are annoyed that their ratings/suggestions won't carry over to the new site, and that the streaming-site won't let them add a movie to their DVD-by-mail queue when they search for a title and find it's not available on streaming (or vice versa, the DVD-by-mail site won't tell them when they could be watching a title via streaming). You have to fix that to fix the customer response.
- jeffool 15y ago
  I wonder if allowing an API that lets users import and export their ratings would help. Maybe even allow non-paying members to sign up just to rate and suggest films, and constantly entice viewers with a "watch now with a Netflix subscription!" logo in the corner. They could easily try to take share from IMDB and Rotten Tomatoes, and be "the website for movies". Every time someone makes a post on Facebook or Twitter it could be "_____ rates <film> !"
- Tloewald 15y ago
  Agreed. In the end this is all about Netflix and not about its customers. If any of this had anything positive to offer customers it could have been spun better, but it doesn't. I think netflix is actually in deep trouble. It's lost Starz, and could be losing other valuable rights, it's changing its business model in a way tha damages its own stickiness, and it raised its prices in a recession for reasons that make no sense to customers.
  - ShawnJG 15y ago
    Not to mention that a lot of there growth was due to the fact that they had a fiercely loyal cust base that proselytized endlessly for them. I remember getting an email from them years ago that said in essence, "We've upgraded our systems and are now more efficient. because of this your plan will be reduced by xyz." Better service and cheaper, i thought they had me for life...until recently.
foulmouthboy 15y ago
The whole point of the original email was to recognize that their pricing changes made them seem out of touch. What's so bad about a CEO apologizing to his customer base? Also, I'll always take product name critiques with a grain of salt. I remember when people were complaining about how awkward MacBook Pro sounded. Don't even get me started on "iPod". If the service is good, then people will use the name and avoid the confusion that's been happening with the soon-to-be previous Netflix configuration.
- pork 15y ago
  Hell, remember ipad? Sanitary napkin jokes, pundits predicting doom, and a stoic Jobs? But it's almost become the "xerox" of tablets. Unfortunately, the name is the least stupid aspect of Netflix's new plan.
  - uptown 15y ago
    I'd argue that the difference between iPad, iPad, MacBook Pro and Qwickster is that it's very very easy to mis-spell Qwickster. It could be Qwickster, Quickster, Qwikster, Quikster, Qwickstr (if you wanna go the Flickr route) and probably some variations I haven't thought of. At the very least, Netflix should have made an effort to secure the domain-names for these alternate spellings to ensure their customers can find them when they finally go live.
    - Bud 15y ago
      The other difference is that Qwikster is a deeply stupid name. The other other difference is that iPad, iPod, iPhone, etc. actually describe their eponymous products, and Qwikster doesn't recognizably describe anything.
      - _pius 15y ago
        The other other difference is that iPad, iPod, iPhone, etc. actually describe their eponymous products ... iPhone? Sure. iPad? Maybe. iPod? Definitely not. It only seems that way because the iPod dominated the product category so strongly as to become synonymous with "portable digital music player."
wccrawford 15y ago
I think that would solve the crisis of people hating the name, but it's not going to stop all the people who are angry about having to maintain 2 queues.
superkinz 15y ago
Would have been better if they attributed the change to getting squeezed by Hollywood. At least people could sympathize rather than make Netflix into a villain. I suspect the change came in large part due to payment terms on all accounts as opposed to accounts consuming media.
- jfruh 15y ago
  That might help with their relations with customers, but probably wouldn't endear them to the media companies they have to negotiate with. Those negotiations are no doubt already pretty tense, and Netflix shouting loudly about what jerks they are won't make them less so.
  - crenshaw 15y ago
    I don't even think you need to call them jerks. Just say something like, "Our new licensing deals have us moving to a model where we are charged, not for how often you stream video, but for everyone who could potentially stream video. This means that if you're not watching our instant streaming at all today, but only using the DVD service, we still have to count you as a head. So we decided that the best way to handle this was to separate our DVD from streaming service. This way we, and you, pay for the services you use, and not what you don't. Now you may then ask, 'why the fee hike?' Simply put, the math doesn't add up otherwise. To keep $9.99 pricing we'd have to do something like $4.99 for DVD rental and $4.99 for video streaming. Compare our DVD pricing to Blockbuster -- even at $7.99/month we're still cheaper. $4.99 for video streaming would only barely cover our licensing costs. We found a reasonable price point that allows us to offer great DVD and streaming services going forward."
ckenst 15y ago
I'm fine with the changes Netflix made, although I would prefer to login to only one site.
yesimahuman 15y ago
I think "Netflix Classic" would be a poor name for the old service. It would be shortened to "Netflix" in conversation and cause a whole host of problems and confuse customers which "version" they were on.
- jfernandez 15y ago
  It's also a poor idea to use a subdomain for the main entry point to a separate service (by their design), i.e. users of 'classic' will still type 'netflix.com'.
deweller 15y ago
Keeping the logo and the word Netflix in the new company name makes it less attractive should they wish to sell it off. Just sayin'.
- adharmad 15y ago
  Rebranding the DVD company is relatively easier than the streaming one due to the many devices in people's homes which are "netflix enabled"
tibbon 15y ago
I'm guessing someone in PR wrote a letter just like it. Then the CEO decided that it didn't really have the emotion and humility that the one posted had. Sure, PR can spin anything to seem pretty, but sometimes its really just better to admit failings (pricing changes) and show that you're not perfect.
- BlazingFrog 15y ago
  If Hastings admitted to a mistake, it's for failing to explain what they were doing more clearly. His words: " It wouldn’t have changed the price increase, but it would have been the right thing to do." Am I the only one hearing a hint of condescension here?
tomkarlo 15y ago
The name change and web site split is obviously the prelude to a spin-off. They split their stock between the streaming business and the mail business, shareholders get shares in both (and the right to hold or sell the portion they prefer) and the two businesses go their separate ways. It's a really smart way to deal with a company that has a developing business and a mature but declining business, and it will probably unlock significant value in the stock market value, because it lets people cherry pick which business they want to invest in.
rumblestrut 15y ago
Reed Hastings makes me wonder what kind of company Netflix is. Does Netflix listen to its customers? I've hated the website redesign since it launched and from what I've read, I'm certainly not alone. I find the redesign to be much less user friendly than the old one, which I loved. I don't login as much as before to browse, review and add to my queue. I avoid the website and stick to watching stuff on my Roku. In my opinion, the redesign took the Netflix website from one that was fun to use, to one that devalued the company to being just another company that provides movies. The charm is gone. And now this odd, Qwikstupid thing. That site isn't even up yet. Is it because they planned it that way, or are they looking for customer feedback first before making any concrete changes? And that takes me back to my original point: does Netflix care about customer feedback? (edited for my terrible typos)
- AdamTReineke 15y ago
  Netflix does listen to user feedback. Back in 08, the profiles feature almost got the ax before vocal user feedback convinced them to keep it. I'm sure they're listening, regardless of what the final outcome is. June 19, 2008 - Removing Profiles - http://blog.netflix.com/2008/06/profiles-feature-going-away.html http://blog.netflix.com/2008/06/profiles-feature-going-away.... June 30, 2008 - Nevermind - http://blog.netflix.com/2008/06/profiles-feature-not-going-away.html http://blog.netflix.com/2008/06/profiles-feature-not-going-a... (Work has any URL with "netflix.com" blocked, so I'm guessing these are right blog posts.)
  - ktf 15y ago
    I remember vocal user feedback telling them not to ax the "friends" feature too, but that's long gone. (And sorely missed, at least by me.) I also remember vocal user feedback telling them not to switch to Silverlight, for that matter. I was one of the many who stopped being able to use their streaming service when that change went through, until I recently bought a PS3.
  - Klinky 15y ago
    I don't consider pissing off a large portion of your customer base causing a backlash so strong that you backtrack to be "listening to customer feedback". It's more like "poking the hornets nest & getting stung". Netflix has a history of shooting first & asking questions later. As far as giving feedback or suggestions voluntarily as a customer, good luck. You can't do it on the website & any suggestion you give to a customer service rep stays with the customer service rep & goes no further. It's a sad state of affairs when the best 1-on-1 communication with customers Netflix has had as a company is their CEO doing damage control in Facebook comment threads.
lukifer 15y ago
It's downright embarrassing how badly Netflix has botched this transition. Not only was Netflix sitting on 25 million happy subscribers, but subscribers who were notoriously brand-loyal, and whose word-of-mouth promotion effectively acted as an unpaid sales and marketing force. Now they seem to be doing everything they can to alienate their most dedicated users, essentially saying "We don't want your business anymore". As a Netflix user for 5+ years, I for one can't wait until a viable competitor with equivalent selection emerges.
- joeguilmette 15y ago
  I spent 20 minutes on Netflix last night looking for one decent movie that I haven't seen. I gave up and watched reruns (hah, deprecated term) of The Office on Hulu. I hate their new site, I think Qwikster is a good idea poorly executed, but if they have good movies I'll still use them. If they continue to have crap, will cancel my Netflix account sooner rather than later and happily go back to piracy.
- bittermang 15y ago
  To me, it goes beyond selection. Netflix is great because it's embedded, deep. I don't care if anyone else spins up the best, cheapest, most wonderful streaming solution ever. Because Netflix is already on my Xbox. Or my Wii. Or my iPhone. Or my PS3. Or my Roku. Or my TV. They're in deep, and no one else has the coverage they do. I can't watch Amazon's streaming product on my Xbox. I can't watch any of a dozen different channel specific streaming options on anything but a web browser. I can't wait for a viable competitor with equivalent selection AND device coverage emerges.
- maratd 15y ago
  It wasn't botched. Everything is by design. Qwikster or whatever they are calling, is a direct competitor to Netflix, in the same way that Blockbuster was a direct competitor to Netflix. It's the last generation tech. They want to kill it. They want to kill it fast because streaming customers are more profitable. They want you to switch from physical media to streaming NOW. Yes, yes, I know you can't get that esoteric or new release by streaming. There's a ton of stuff that never made it to DVD that is still on VHS or Beta. I don't see you crying over that. Netflix knows this. They are accelerating the switch and they're doing that by killing their DVD division in the most horrid way possible. That game rental thing is a bone meant to mislead you and is absolutely pointless. That part of the rental industry is being killed off by Steam. They know that too.
ctdonath 15y ago
Unified queue. Regardless of media, business structure, delivery mechanism, company name, etc. methinks what all customers want is a single place to choose & queue content, filtered by whatever options they desire, delivered on whatever medium is available and they pay for via a spectrum of contracts (from unlimited-per-month to single order). Just make sure it's all on one queue. If multi-queue, then only because one customer may be grouping for multiple individuals (ex.: husband wants ultraviolent scifi, wife wants sappy romances, kids want Elmo galore). Whatever you do, don't force the customer to spend time/effort along such artificial differences as media (ex.: I want the DVD of "Scarface", but it's not on streaming anymore and I don't want to pay extra for the BD version - let me pick those options based on my single content choice, don't make me search 2-3 different sites for the same title which, I notice, have unreliable availability). Amazon faces the same issue: vast business differences between warehouses of books & other physical stuff shipped by mail, vs. server farms for Kindle, streaming video, cloud storage/processing, etc. - same problem as Netflix, yet they're doing well under one website. I can search for Moby's latest album, and when ready to order can with ease choose between CD, MP3, DVD, and instant video: same content pool, same checkout, easy delivery, user doesn't care how it all happened.
- joeguilmette 15y ago
  Don't forget ratings. Many people have years and years of ratings that drive their algorithm. That is now gone. Good job guys.
  - phil 15y ago
    We don't know that yet! I'm quite interested to see how they handle user data in the split -- will each company get a copy? Will the Netflix side maintain a complete database of movies, even if it can't stream them, so that you can continue to rate freely and get recommendations? There are some thorny user experience problems here for sure, but they are not unsolvable.
    - joeguilmette 15y ago
      they are clearly not unsolvable, and in my view they aren't even thorny UX problems. they are clear cut. the issue is that Netflix thus far has done zero to try to make them better and has, ever step of the way, created these issues when a simple, customer friendly workaround seems apparent. what to do about ratings? make the two sites interoperable. hell, create an API for Netflix ratings. what to do about the two Queues? i already have two Queues on Netflix. make the two sites interoperable. seems pretty basic for a big league company. whatever. i am not shedding any tears. I've been watching movies online for almost 10 years now and I'm going to continue doing so. whether i pay netflix money or fire up a BT client, i don't really care. the real question is: does Hollywood want my money?
janesvilleseo 15y ago
In order for them to survive, they have to split their customers. It sucks, big time. They don't want to do it, but those who own the content are holding a gun to their head. So they have to chop their customers into two so that 7.99 is palatable to both their customers and their bottom line. And they are playing nice so that gun doesn't get bigger and blow a larger hole in their wallet.
durga 15y ago
Terrific - couldn't have phrased it better. Only missing item is maintaining ratings/carrying them over. I wonder if Reed hastings was drunk or high when he made these announcements and wrote that blog post. Hard to believe someone who built a business so shrewdly could screw up like this..
Jun8 15y ago
"Common sense is not so common"! This is incomparable to the actual post, it highlights the positive points and addresses some (though not all) FUDs. Similar to HP, Netflix made the huge mistake of announcing big changes in one big lump, creating a chaotic reaction. They probably should have waited a little to announce the split. Keeping the Netflix name for both companies would have been a great idea (see the two Motorola companies), as commented here it was done this way most probably because they will sell the DVD business and use that money to invest in streaming.
- initself 15y ago
  The gave their future competitor a pretty crappy name!
dugmartin 15y ago
The problem with using "Netflix Classic" is it wouldn't allow them to sell it in 12 months as a distinct brand so they can get the dropping subscriber numbers off their books.
kcurtin 15y ago
This letter isn't in line with Netflix's strategy. They want the Netflix brand to be completely unassociated with by-mail DVDs. Sure Qwikster is a stupid name, but in a years time we will think of it as it's own entity/brand. Netflix classic would not accomplish this.
mdda 15y ago
Even if they're separate companies, Qwikster and Netflix should license (for pay) the queue information between themselves. That way customers will remain happy, and the Qwikster brand could be sold to someone that wanted a business that has a sustainable deal with the content providers...
steve8918 15y ago
I still think the separation of the DVD and streaming businesses was to "firewall" the cash flow of the DVD business, so that content providers couldn't use that against the streaming business in negotiations. This would severely limit the amount of money that a content provider could charge Netflix streaming. But it's fairly obvious that this plan was too qwikly put in place, without proper due diligence. They didn't even bother to get the rights for @Qwikster on Twitter BEFORE announcing this, which was a huge PR blunder. 2 weeks ago, they could have bought the name for $1000 from this pot-smoking kid, but now I think it's worth at least 6 digits to them, just to end the embarrassment.
lubujackson 15y ago
The problem is everything wrong with the Netflix changes makes sense... if you're Netflix and hellbent on selling off your DVD business. Of course they didn't consider the users in all of this - the whole point is to shed Quikster as quickly as possible, probably by selling it to Redbox or Amazon or something. That's why we can't have a shared queue or keep the same name or keep the pricing unified on the bill. All of this is simple to do if Quikster is a subsidiary but I wouldn't be surprised if Netflix already has a buyer for Quikster lined up. These changes have the stink of "buyer requests".
jerrya 15y ago
Netflix has handled this so badly for customers and investors, and so obviously badly at that, that I can either believe they are incompetent, or that there are hidden factors (lawyers) at play. The conspiracy theorist in me leads me to suspect it's somehow related to cost of licensing content for streaming, and negotiation positioning with Hollywood. That by burning the DVD bridge, Netflix can somehow lower costs dramatically or make their position in negotiations better. (But don't ask me how.) Otherwise I have to believe Reed Hastings picked the wrong week to start sniffing glue.
lubujackson 15y ago
An interesting point about the name Quikster - they took the ONE weakness of the DVD by mail service (you have to wait a few days) and made it the centerpoint of their name. Completely tone-deaf branding. Not to mention archaic domain naming (-ster? Friendster was a long time ago and doesn't have a nice shine anymore). I don't work in marketing, but I couldn't imagine much worse unless they tried on purpose. Maybe "Shitster."
- aridiculous 15y ago
  It's easy to remember but that's about it. It literally could describe anything: oil change service, magazine publisher, board game company. It's kind of refreshing to see such a textbook, illuminated lesson in bad management in the tech world, when usually all we get to see are the all-stars.
pshapiro 15y ago
Just me or does that sound awfully close to Apple's marketing language? "We think the benefits are going to be huge."?
brackin 15y ago
The core issue here is the pricing change wasn't just about making more money, the main reason was Netflix had to pay a lot of money for users with Streaming included but had never used it. As they had to say in the licensing "x amount of users have streaming" when only a percentage had ever used it". The idea was they could now say "These users are specifically paying for streaming". They'd already split up the two plans into two different business departments. In my opinion they should have offered a streaming plan, DVD plan but let DVD users pay a small premium to access streaming instead of doubling their core users bills, if they wanted to sort this licensing issue.
neduma 15y ago
Impressive discussions. I like the Spotify model compared to Netflix. Care to comment?
- spullara 15y ago
  The Spotify streaming model is the same as the Netflix streaming model. They just have far fewer licenses. What do you see as distinguishing characteristics of Spotify over Netflix beyond available content?
raganwald 15y ago
http://raganwald.posterous.com/netflix-and-the-costs-of-courage http://raganwald.posterous.com/netflix-and-the-costs-of-cour...
deleted 15y ago
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rglover 15y ago
Regarding this suggested letter, the author is spot on with how this should have been handled. There's really little reason for taking the DVD portion of the company and rebranding it under a totally different (and poorly selected) name. I don't understand why Reed and the rest of the team at Netflix are throwing away such an incredible business. Like any business that offers both old and new options, they should have merely announced a plan (much like what was suggested in this letter) to slowly phase out DVDs and educate their customers on the benefits of streaming (as well as developed a plan for making more DVD-only content available via the streaming service). This just feels like that scene in the Beach where the guy gets his leg bit off by a shark and is taken out into the woods to die slowly. Despite this mistake, I still love Netflix (it's my primary source of television save for torrents). I hope they can recover from this and really turn around the brand. If not, I'll be really sad if I have to subscribe to cable again.
jmilloy 15y ago
A DVD-by-mail queue makes sense to me. What does "queue" mean in a streaming service, especially one where availability is frequently changing? In fact, DVD-by-mail and streaming services require and invite dramatically different management by the user. I don't want a unified queue, because I don't want a queue for my streaming service. I can think of many ways in which I would want integration between my activity in each service, of which a unified queue is one of the least innovative and least helpful. I have to believe that, even if Netflix/Qwikster can't provide useful integration, someone can. Despite my initial negative reaction to the split, these opportunities actually make me a little excited.
- morrow 15y ago
  I think for a lot of people, myself included, a queue is simply a list of movies I'd like to see, in roughly the order I'd like to see them. Choosing a delivery method for the movie is a secondary thought, that right now is dead simple to do -- given availability information for the movie for each queue type, simply click the button for the available queue that best suits your needs. You also have the ability to see and play movies that become available to stream while sitting in your DVD queue, and can move a movie from your instant queue to DVD if you'd like. The two services blend well enough together to form a layer of abstraction, letting you use Netflix as a unified movie-finding-and-watching platform instead of just as a "DVD delivery service" or "Movie streaming service". I believe that DVD will eventually die and streaming will be the primary way to watch movies, but the streaming selection just isn't there right now, and splitting the company like this forces customers to deal so heavily and directly with delivery methods that it dissolves that abstraction layer that made Netflix so valuable in the first place. They now have to sell potential future (and unhappy existing) subscribers on 2 new separate products: a "DVD delivery service" and a "movie streaming service", neither of which really measure up the the way the combined system did, and for the same price!
kreek 15y ago
I like the idea of keeping it under one brand but Netflix "Classic" reminds of me of "Classic" Coke. It's like AT&T calling home phone service "Classic" phone :) It could be Netflix:Online and Netflix:Offline or Netflix:Instant and Netflix:Delivered etc.
sambeau 15y ago
By keeping one brand it becomes more difficult to sell-off the silver disk business without impacting the download business negatively. Better to make a clean break now. The only way the Netflix Classic plan makes any sense is as a staging post to splitting the company in two. This would have been good PR as well as a sensible internal business step. It lets everyone get used to the idea gradually.
plink 15y ago
Quikster sounds too much like Amway's failed Quickstar. Classy.
codeslush 15y ago
This says it all: http://theoatmeal.com/comics/netflix http://theoatmeal.com/comics/netflix
absconditus 15y ago
People would have bitched no matter what they said. The level of entitlement in modern society is pretty shocking.
iradik 15y ago
Change the implementation, not the API. Netflix broke their API with their customers, so they're gonna be confused and upset. No explanation, no matter how good, will fix that. It's like when you write a long comment in some code to explain why your code is goofy. Just fix the code! In this case netflix needed to make their site more usable and make the pricing distinctions between streaming and dvd more clear. New company, new prices, new billing options. Wayyy to much info for your avg customer. Netflix is way too confident if they think, customers won't cancel their plans with all these questions being raised. Once a customer starts to think about all these options, they might just think I don't really use Netflix much anyway!
iradik 15y ago
Change the implementation, not the API. Netflix broke their API with their customers, so they're gonna be confused and upset. No explanation, no matter how good, will fix that. It's like when you write a long comment in some code to explain why your code is goofy. Just fix the code! In this case netflix needed to make their site more usable and make the pricing distinctions between streaming and dvd more clear. New company, new prices, new billing options. Wayyy to much info for your avg customer. Netflix is way too confident if they think, customers won't cancel their plans with all these questions being raised. Once a customer starts to think about all these options, they might just think I don't really use Netflix much anyway!
iradik 15y ago
Change the implementation, not the API. Netflix broke their API with their customers, so they're gonna be confused and upset. No explanation, no matter how good, will fix that. It's like when you write a long comment in some code to explain why your code is goofy. Just fix the code! In this case netflix needed to make their site more usable and make the pricing distinctions between streaming and dvd more clear. New company, new prices, new billing options. Wayyy to much info for your avg customer. Netflix is way too confident if they think, customers won't cancel their plans with all these questions being raised. Once a customer starts to think about all these options, they might just think I don't really use Netflix much anyway!

367 points by barredo 15y ago

I think they renamed the DVD service so that it allows them the flexibility to sell it off at a later stage, I dont see anyone mentioning this but it is quite common for businesses to sell parts of the business to gain cash to pump into their future expansions. In this case it makes sense to put 100% into streaming.

wccrawford 15y ago
When they split the revenue without having a 'combined plan' discount, I was pretty sure the DVD half was going to die. They were just planning for it. My theory is that they are going to sell it before it stops being profitable... But keeping it as a separate company allows them to let it die without it taking the whole thing down, if worst comes to worst.
joemysterio 15y ago
I agree. They had to know they'd confuse and alienate people by changing the name of the service _and_ creating an whole new website for people to figure out. But it does allow them to extract the highest value should they sell it off later (and they will). With plans to sell there was only two things that would have been even more bone-headed than what they did: :a => "Sell it as Netflix DVD (or something like that) and have two companies named Netflix running around." :b => "Sell it and force the acquiring company to change the name, in which case they would have to accept a huge discount on the value of the business."

sbkirk 15y ago

I prefer the original. I got the email as a customer and felt like it did a decent job for what it was trying to do.

dave1619 15y ago

This letter is genius. If Netflix had sent it out I think it would have averted the entire crisis.

tyree732 15y ago
I don't think any of the serious complains about the letter had to do with the new name or the tone in which it was delivered. I don't think anyone would cancel their service over the name Qwikster or because the CEO is a jerk. The real complaints dealt with the separation of the services and thus the separations of the ratings system and of queue management. This letter does not address either of those issues, and thus would fix nothing.
- Elfan 15y ago
  The fake letter doesn't separate them: > Members can log into both sites using the same login. This will allow streaming-only members to add DVD by mail, and DVD-only members to upgrade to streaming, at any time. The websites, however, will remain separate, so that we can start giving these different worlds the unique attention they deserve.
  - tyree732 15y ago
    > The websites, however, will remain separate, so that we can start giving these different worlds the unique attention they deserve. Sounds like they are being separated to me.

brown9-2 15y ago

It's not just the tone of the email or the new name that bugs people - it's the complete separation of their sites, pretending that the DVD-by-mail site can't communicate with the streaming-only site, etc. People are annoyed that their ratings/suggestions won't carry over to the new site, and that the streaming-site won't let them add a movie to their DVD-by-mail queue when they search for a title and find it's not available on streaming (or vice versa, the DVD-by-mail site won't tell them when they could be watching a title via streaming). You have to fix that to fix the customer response.

jeffool 15y ago
I wonder if allowing an API that lets users import and export their ratings would help. Maybe even allow non-paying members to sign up just to rate and suggest films, and constantly entice viewers with a "watch now with a Netflix subscription!" logo in the corner. They could easily try to take share from IMDB and Rotten Tomatoes, and be "the website for movies". Every time someone makes a post on Facebook or Twitter it could be "_____ rates <film> !"
Tloewald 15y ago
Agreed. In the end this is all about Netflix and not about its customers. If any of this had anything positive to offer customers it could have been spun better, but it doesn't. I think netflix is actually in deep trouble. It's lost Starz, and could be losing other valuable rights, it's changing its business model in a way tha damages its own stickiness, and it raised its prices in a recession for reasons that make no sense to customers.
- ShawnJG 15y ago
  Not to mention that a lot of there growth was due to the fact that they had a fiercely loyal cust base that proselytized endlessly for them. I remember getting an email from them years ago that said in essence, "We've upgraded our systems and are now more efficient. because of this your plan will be reduced by xyz." Better service and cheaper, i thought they had me for life...until recently.

foulmouthboy 15y ago

The whole point of the original email was to recognize that their pricing changes made them seem out of touch. What's so bad about a CEO apologizing to his customer base? Also, I'll always take product name critiques with a grain of salt. I remember when people were complaining about how awkward MacBook Pro sounded. Don't even get me started on "iPod". If the service is good, then people will use the name and avoid the confusion that's been happening with the soon-to-be previous Netflix configuration.

pork 15y ago
Hell, remember ipad? Sanitary napkin jokes, pundits predicting doom, and a stoic Jobs? But it's almost become the "xerox" of tablets. Unfortunately, the name is the least stupid aspect of Netflix's new plan.
- uptown 15y ago
  I'd argue that the difference between iPad, iPad, MacBook Pro and Qwickster is that it's very very easy to mis-spell Qwickster. It could be Qwickster, Quickster, Qwikster, Quikster, Qwickstr (if you wanna go the Flickr route) and probably some variations I haven't thought of. At the very least, Netflix should have made an effort to secure the domain-names for these alternate spellings to ensure their customers can find them when they finally go live.
  - Bud 15y ago
    The other difference is that Qwikster is a deeply stupid name. The other other difference is that iPad, iPod, iPhone, etc. actually describe their eponymous products, and Qwikster doesn't recognizably describe anything.
    - _pius 15y ago
      The other other difference is that iPad, iPod, iPhone, etc. actually describe their eponymous products ... iPhone? Sure. iPad? Maybe. iPod? Definitely not. It only seems that way because the iPod dominated the product category so strongly as to become synonymous with "portable digital music player."

wccrawford 15y ago

I think that would solve the crisis of people hating the name, but it's not going to stop all the people who are angry about having to maintain 2 queues.

superkinz 15y ago

Would have been better if they attributed the change to getting squeezed by Hollywood. At least people could sympathize rather than make Netflix into a villain. I suspect the change came in large part due to payment terms on all accounts as opposed to accounts consuming media.

jfruh 15y ago
That might help with their relations with customers, but probably wouldn't endear them to the media companies they have to negotiate with. Those negotiations are no doubt already pretty tense, and Netflix shouting loudly about what jerks they are won't make them less so.
- crenshaw 15y ago
  I don't even think you need to call them jerks. Just say something like, "Our new licensing deals have us moving to a model where we are charged, not for how often you stream video, but for everyone who could potentially stream video. This means that if you're not watching our instant streaming at all today, but only using the DVD service, we still have to count you as a head. So we decided that the best way to handle this was to separate our DVD from streaming service. This way we, and you, pay for the services you use, and not what you don't. Now you may then ask, 'why the fee hike?' Simply put, the math doesn't add up otherwise. To keep $9.99 pricing we'd have to do something like $4.99 for DVD rental and $4.99 for video streaming. Compare our DVD pricing to Blockbuster -- even at $7.99/month we're still cheaper. $4.99 for video streaming would only barely cover our licensing costs. We found a reasonable price point that allows us to offer great DVD and streaming services going forward."

ckenst 15y ago

I'm fine with the changes Netflix made, although I would prefer to login to only one site.

yesimahuman 15y ago

I think "Netflix Classic" would be a poor name for the old service. It would be shortened to "Netflix" in conversation and cause a whole host of problems and confuse customers which "version" they were on.

jfernandez 15y ago
It's also a poor idea to use a subdomain for the main entry point to a separate service (by their design), i.e. users of 'classic' will still type 'netflix.com'.

deweller 15y ago

Keeping the logo and the word Netflix in the new company name makes it less attractive should they wish to sell it off. Just sayin'.

adharmad 15y ago
Rebranding the DVD company is relatively easier than the streaming one due to the many devices in people's homes which are "netflix enabled"

tibbon 15y ago

I'm guessing someone in PR wrote a letter just like it. Then the CEO decided that it didn't really have the emotion and humility that the one posted had. Sure, PR can spin anything to seem pretty, but sometimes its really just better to admit failings (pricing changes) and show that you're not perfect.

BlazingFrog 15y ago
If Hastings admitted to a mistake, it's for failing to explain what they were doing more clearly. His words: " It wouldn’t have changed the price increase, but it would have been the right thing to do." Am I the only one hearing a hint of condescension here?

tomkarlo 15y ago

The name change and web site split is obviously the prelude to a spin-off. They split their stock between the streaming business and the mail business, shareholders get shares in both (and the right to hold or sell the portion they prefer) and the two businesses go their separate ways. It's a really smart way to deal with a company that has a developing business and a mature but declining business, and it will probably unlock significant value in the stock market value, because it lets people cherry pick which business they want to invest in.

rumblestrut 15y ago

Reed Hastings makes me wonder what kind of company Netflix is. Does Netflix listen to its customers? I've hated the website redesign since it launched and from what I've read, I'm certainly not alone. I find the redesign to be much less user friendly than the old one, which I loved. I don't login as much as before to browse, review and add to my queue. I avoid the website and stick to watching stuff on my Roku. In my opinion, the redesign took the Netflix website from one that was fun to use, to one that devalued the company to being just another company that provides movies. The charm is gone. And now this odd, Qwikstupid thing. That site isn't even up yet. Is it because they planned it that way, or are they looking for customer feedback first before making any concrete changes? And that takes me back to my original point: does Netflix care about customer feedback? (edited for my terrible typos)

AdamTReineke 15y ago
Netflix does listen to user feedback. Back in 08, the profiles feature almost got the ax before vocal user feedback convinced them to keep it. I'm sure they're listening, regardless of what the final outcome is. June 19, 2008 - Removing Profiles - http://blog.netflix.com/2008/06/profiles-feature-going-away.html http://blog.netflix.com/2008/06/profiles-feature-going-away.... June 30, 2008 - Nevermind - http://blog.netflix.com/2008/06/profiles-feature-not-going-away.html http://blog.netflix.com/2008/06/profiles-feature-not-going-a... (Work has any URL with "netflix.com" blocked, so I'm guessing these are right blog posts.)
- ktf 15y ago
  I remember vocal user feedback telling them not to ax the "friends" feature too, but that's long gone. (And sorely missed, at least by me.) I also remember vocal user feedback telling them not to switch to Silverlight, for that matter. I was one of the many who stopped being able to use their streaming service when that change went through, until I recently bought a PS3.
- Klinky 15y ago
  I don't consider pissing off a large portion of your customer base causing a backlash so strong that you backtrack to be "listening to customer feedback". It's more like "poking the hornets nest & getting stung". Netflix has a history of shooting first & asking questions later. As far as giving feedback or suggestions voluntarily as a customer, good luck. You can't do it on the website & any suggestion you give to a customer service rep stays with the customer service rep & goes no further. It's a sad state of affairs when the best 1-on-1 communication with customers Netflix has had as a company is their CEO doing damage control in Facebook comment threads.

lukifer 15y ago

It's downright embarrassing how badly Netflix has botched this transition. Not only was Netflix sitting on 25 million happy subscribers, but subscribers who were notoriously brand-loyal, and whose word-of-mouth promotion effectively acted as an unpaid sales and marketing force. Now they seem to be doing everything they can to alienate their most dedicated users, essentially saying "We don't want your business anymore". As a Netflix user for 5+ years, I for one can't wait until a viable competitor with equivalent selection emerges.

joeguilmette 15y ago
I spent 20 minutes on Netflix last night looking for one decent movie that I haven't seen. I gave up and watched reruns (hah, deprecated term) of The Office on Hulu. I hate their new site, I think Qwikster is a good idea poorly executed, but if they have good movies I'll still use them. If they continue to have crap, will cancel my Netflix account sooner rather than later and happily go back to piracy.
bittermang 15y ago
To me, it goes beyond selection. Netflix is great because it's embedded, deep. I don't care if anyone else spins up the best, cheapest, most wonderful streaming solution ever. Because Netflix is already on my Xbox. Or my Wii. Or my iPhone. Or my PS3. Or my Roku. Or my TV. They're in deep, and no one else has the coverage they do. I can't watch Amazon's streaming product on my Xbox. I can't watch any of a dozen different channel specific streaming options on anything but a web browser. I can't wait for a viable competitor with equivalent selection AND device coverage emerges.
maratd 15y ago
It wasn't botched. Everything is by design. Qwikster or whatever they are calling, is a direct competitor to Netflix, in the same way that Blockbuster was a direct competitor to Netflix. It's the last generation tech. They want to kill it. They want to kill it fast because streaming customers are more profitable. They want you to switch from physical media to streaming NOW. Yes, yes, I know you can't get that esoteric or new release by streaming. There's a ton of stuff that never made it to DVD that is still on VHS or Beta. I don't see you crying over that. Netflix knows this. They are accelerating the switch and they're doing that by killing their DVD division in the most horrid way possible. That game rental thing is a bone meant to mislead you and is absolutely pointless. That part of the rental industry is being killed off by Steam. They know that too.

ctdonath 15y ago

Unified queue. Regardless of media, business structure, delivery mechanism, company name, etc. methinks what all customers want is a single place to choose & queue content, filtered by whatever options they desire, delivered on whatever medium is available and they pay for via a spectrum of contracts (from unlimited-per-month to single order). Just make sure it's all on one queue. If multi-queue, then only because one customer may be grouping for multiple individuals (ex.: husband wants ultraviolent scifi, wife wants sappy romances, kids want Elmo galore). Whatever you do, don't force the customer to spend time/effort along such artificial differences as media (ex.: I want the DVD of "Scarface", but it's not on streaming anymore and I don't want to pay extra for the BD version - let me pick those options based on my single content choice, don't make me search 2-3 different sites for the same title which, I notice, have unreliable availability). Amazon faces the same issue: vast business differences between warehouses of books & other physical stuff shipped by mail, vs. server farms for Kindle, streaming video, cloud storage/processing, etc. - same problem as Netflix, yet they're doing well under one website. I can search for Moby's latest album, and when ready to order can with ease choose between CD, MP3, DVD, and instant video: same content pool, same checkout, easy delivery, user doesn't care how it all happened.

joeguilmette 15y ago
Don't forget ratings. Many people have years and years of ratings that drive their algorithm. That is now gone. Good job guys.
- phil 15y ago
  We don't know that yet! I'm quite interested to see how they handle user data in the split -- will each company get a copy? Will the Netflix side maintain a complete database of movies, even if it can't stream them, so that you can continue to rate freely and get recommendations? There are some thorny user experience problems here for sure, but they are not unsolvable.
  - joeguilmette 15y ago
    they are clearly not unsolvable, and in my view they aren't even thorny UX problems. they are clear cut. the issue is that Netflix thus far has done zero to try to make them better and has, ever step of the way, created these issues when a simple, customer friendly workaround seems apparent. what to do about ratings? make the two sites interoperable. hell, create an API for Netflix ratings. what to do about the two Queues? i already have two Queues on Netflix. make the two sites interoperable. seems pretty basic for a big league company. whatever. i am not shedding any tears. I've been watching movies online for almost 10 years now and I'm going to continue doing so. whether i pay netflix money or fire up a BT client, i don't really care. the real question is: does Hollywood want my money?

janesvilleseo 15y ago

In order for them to survive, they have to split their customers. It sucks, big time. They don't want to do it, but those who own the content are holding a gun to their head. So they have to chop their customers into two so that 7.99 is palatable to both their customers and their bottom line. And they are playing nice so that gun doesn't get bigger and blow a larger hole in their wallet.

durga 15y ago

Terrific - couldn't have phrased it better. Only missing item is maintaining ratings/carrying them over. I wonder if Reed hastings was drunk or high when he made these announcements and wrote that blog post. Hard to believe someone who built a business so shrewdly could screw up like this..

Jun8 15y ago

"Common sense is not so common"! This is incomparable to the actual post, it highlights the positive points and addresses some (though not all) FUDs. Similar to HP, Netflix made the huge mistake of announcing big changes in one big lump, creating a chaotic reaction. They probably should have waited a little to announce the split. Keeping the Netflix name for both companies would have been a great idea (see the two Motorola companies), as commented here it was done this way most probably because they will sell the DVD business and use that money to invest in streaming.

initself 15y ago
The gave their future competitor a pretty crappy name!

dugmartin 15y ago

The problem with using "Netflix Classic" is it wouldn't allow them to sell it in 12 months as a distinct brand so they can get the dropping subscriber numbers off their books.

kcurtin 15y ago

This letter isn't in line with Netflix's strategy. They want the Netflix brand to be completely unassociated with by-mail DVDs. Sure Qwikster is a stupid name, but in a years time we will think of it as it's own entity/brand. Netflix classic would not accomplish this.

mdda 15y ago

Even if they're separate companies, Qwikster and Netflix should license (for pay) the queue information between themselves. That way customers will remain happy, and the Qwikster brand could be sold to someone that wanted a business that has a sustainable deal with the content providers...

steve8918 15y ago

I still think the separation of the DVD and streaming businesses was to "firewall" the cash flow of the DVD business, so that content providers couldn't use that against the streaming business in negotiations. This would severely limit the amount of money that a content provider could charge Netflix streaming. But it's fairly obvious that this plan was too qwikly put in place, without proper due diligence. They didn't even bother to get the rights for @Qwikster on Twitter BEFORE announcing this, which was a huge PR blunder. 2 weeks ago, they could have bought the name for $1000 from this pot-smoking kid, but now I think it's worth at least 6 digits to them, just to end the embarrassment.

lubujackson 15y ago

The problem is everything wrong with the Netflix changes makes sense... if you're Netflix and hellbent on selling off your DVD business. Of course they didn't consider the users in all of this - the whole point is to shed Quikster as quickly as possible, probably by selling it to Redbox or Amazon or something. That's why we can't have a shared queue or keep the same name or keep the pricing unified on the bill. All of this is simple to do if Quikster is a subsidiary but I wouldn't be surprised if Netflix already has a buyer for Quikster lined up. These changes have the stink of "buyer requests".

jerrya 15y ago

Netflix has handled this so badly for customers and investors, and so obviously badly at that, that I can either believe they are incompetent, or that there are hidden factors (lawyers) at play. The conspiracy theorist in me leads me to suspect it's somehow related to cost of licensing content for streaming, and negotiation positioning with Hollywood. That by burning the DVD bridge, Netflix can somehow lower costs dramatically or make their position in negotiations better. (But don't ask me how.) Otherwise I have to believe Reed Hastings picked the wrong week to start sniffing glue.

lubujackson 15y ago

An interesting point about the name Quikster - they took the ONE weakness of the DVD by mail service (you have to wait a few days) and made it the centerpoint of their name. Completely tone-deaf branding. Not to mention archaic domain naming (-ster? Friendster was a long time ago and doesn't have a nice shine anymore). I don't work in marketing, but I couldn't imagine much worse unless they tried on purpose. Maybe "Shitster."

aridiculous 15y ago
It's easy to remember but that's about it. It literally could describe anything: oil change service, magazine publisher, board game company. It's kind of refreshing to see such a textbook, illuminated lesson in bad management in the tech world, when usually all we get to see are the all-stars.

pshapiro 15y ago

Just me or does that sound awfully close to Apple's marketing language? "We think the benefits are going to be huge."?

brackin 15y ago

The core issue here is the pricing change wasn't just about making more money, the main reason was Netflix had to pay a lot of money for users with Streaming included but had never used it. As they had to say in the licensing "x amount of users have streaming" when only a percentage had ever used it". The idea was they could now say "These users are specifically paying for streaming". They'd already split up the two plans into two different business departments. In my opinion they should have offered a streaming plan, DVD plan but let DVD users pay a small premium to access streaming instead of doubling their core users bills, if they wanted to sort this licensing issue.

neduma 15y ago

Impressive discussions. I like the Spotify model compared to Netflix. Care to comment?

spullara 15y ago
The Spotify streaming model is the same as the Netflix streaming model. They just have far fewer licenses. What do you see as distinguishing characteristics of Spotify over Netflix beyond available content?

raganwald 15y ago

http://raganwald.posterous.com/netflix-and-the-costs-of-courage http://raganwald.posterous.com/netflix-and-the-costs-of-cour...

deleted 15y ago

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rglover 15y ago

Regarding this suggested letter, the author is spot on with how this should have been handled. There's really little reason for taking the DVD portion of the company and rebranding it under a totally different (and poorly selected) name. I don't understand why Reed and the rest of the team at Netflix are throwing away such an incredible business. Like any business that offers both old and new options, they should have merely announced a plan (much like what was suggested in this letter) to slowly phase out DVDs and educate their customers on the benefits of streaming (as well as developed a plan for making more DVD-only content available via the streaming service). This just feels like that scene in the Beach where the guy gets his leg bit off by a shark and is taken out into the woods to die slowly. Despite this mistake, I still love Netflix (it's my primary source of television save for torrents). I hope they can recover from this and really turn around the brand. If not, I'll be really sad if I have to subscribe to cable again.

jmilloy 15y ago

A DVD-by-mail queue makes sense to me. What does "queue" mean in a streaming service, especially one where availability is frequently changing? In fact, DVD-by-mail and streaming services require and invite dramatically different management by the user. I don't want a unified queue, because I don't want a queue for my streaming service. I can think of many ways in which I would want integration between my activity in each service, of which a unified queue is one of the least innovative and least helpful. I have to believe that, even if Netflix/Qwikster can't provide useful integration, someone can. Despite my initial negative reaction to the split, these opportunities actually make me a little excited.

morrow 15y ago
I think for a lot of people, myself included, a queue is simply a list of movies I'd like to see, in roughly the order I'd like to see them. Choosing a delivery method for the movie is a secondary thought, that right now is dead simple to do -- given availability information for the movie for each queue type, simply click the button for the available queue that best suits your needs. You also have the ability to see and play movies that become available to stream while sitting in your DVD queue, and can move a movie from your instant queue to DVD if you'd like. The two services blend well enough together to form a layer of abstraction, letting you use Netflix as a unified movie-finding-and-watching platform instead of just as a "DVD delivery service" or "Movie streaming service". I believe that DVD will eventually die and streaming will be the primary way to watch movies, but the streaming selection just isn't there right now, and splitting the company like this forces customers to deal so heavily and directly with delivery methods that it dissolves that abstraction layer that made Netflix so valuable in the first place. They now have to sell potential future (and unhappy existing) subscribers on 2 new separate products: a "DVD delivery service" and a "movie streaming service", neither of which really measure up the the way the combined system did, and for the same price!

kreek 15y ago

I like the idea of keeping it under one brand but Netflix "Classic" reminds of me of "Classic" Coke. It's like AT&T calling home phone service "Classic" phone :) It could be Netflix:Online and Netflix:Offline or Netflix:Instant and Netflix:Delivered etc.

sambeau 15y ago

By keeping one brand it becomes more difficult to sell-off the silver disk business without impacting the download business negatively. Better to make a clean break now. The only way the Netflix Classic plan makes any sense is as a staging post to splitting the company in two. This would have been good PR as well as a sensible internal business step. It lets everyone get used to the idea gradually.

plink 15y ago

Quikster sounds too much like Amway's failed Quickstar. Classy.

codeslush 15y ago

This says it all: http://theoatmeal.com/comics/netflix http://theoatmeal.com/comics/netflix

absconditus 15y ago

People would have bitched no matter what they said. The level of entitlement in modern society is pretty shocking.

iradik 15y ago

Change the implementation, not the API. Netflix broke their API with their customers, so they're gonna be confused and upset. No explanation, no matter how good, will fix that. It's like when you write a long comment in some code to explain why your code is goofy. Just fix the code! In this case netflix needed to make their site more usable and make the pricing distinctions between streaming and dvd more clear. New company, new prices, new billing options. Wayyy to much info for your avg customer. Netflix is way too confident if they think, customers won't cancel their plans with all these questions being raised. Once a customer starts to think about all these options, they might just think I don't really use Netflix much anyway!

iradik 15y ago