13 ms·

Netflix kills Qwikster

384 points by sajid 15y ago

runn1ng 15y ago
OK. Netflix really doesn't know what it's doing.
- Bloodwine 15y ago
  As a Netflix customer I applaud their 180 turnaround on their Qwikster plans. It doesn't matter to me if their flip-flop makes them seem a little scatterbrained, because the decision to keep both services bundled together makes the most sense. Perhaps they realized that if they spin off their DVD business that there would be blood in the water and the likes of Amazon Prime and Blockbuster would feast at their expense. While I do think that online streaming is preferable to DVDs-by-mail, the fact is that there isn't enough online content available for streaming and the DVDs nicely fill in the gaps and I honestly don't think DVDs-by-mail will die off as quickly as they first thought. It makes sense to keep DVDs-by-mail until their online streaming selection is much more broad, diverse, and containing a lot more quality content.
- funkah 15y ago
  That was my first reaction too, but this was really a "damned if you do, damned if you don't" situation for Netflix. People were pissed at the change, and changing it back makes Netflix look bad. So, might as well take the option that users prefer.
- gjm11 15y ago
  Near-universal consensus has it that they didn't know what they were doing when they decided to split off Qwikster. Better to admit now that they didn't know what they were doing, than to keep doing something wrong for fear of admitting to a past mistake. If the split was a mistake, then any embarrassment about correcting it now will be orders of magnitude less expensive to them than failing to correct it.
guelo 15y ago
From the nytimes article [1] it sounds like the investors let him have it "Three days after the announcement, Mr. Hastings wrote in a Facebook status update, “In Wyoming with 10 investors at a ranch/retreat. I think I might need a food taster. I can hardly blame them.” [1] http://mediadecoder.blogs.nytimes.com/2011/10/10/netflix-abandons-plan-to-rent-dvds-on-qwikster/# http://mediadecoder.blogs.nytimes.com/2011/10/10/netflix-aba...
- ramanujan 15y ago
  For anyone else who didn't get this right away: by "a food taster", he means that he thought someone might have poisoned his food. (It only took me a second, but it's not that common a usage today.)
uptown 15y ago
While this rights the ship, Netflix made the colossal mistake of rocking the recurring-billing boat. Smart businesses know that when you've got a customer setup for recurring monthly billing, there's a certain percentage of these customers who will continue to pay even though they're not actively using the service. Part of it is laziness of figuring out how to cancel. Another part is the thought that they may someday use the service more than they are. This has been the model for gyms forever. What Netflix did was force people to re-evaluate whether they truly were getting what they paid for, and in the process they added complexity to their branding by spinning off part of the service into a hard-to-spell company that had nothing buy a landing page. While this may be good for today's stock price, I suspect many of Netflix's customers that re-evaluated their needs may not come back for quite a while ... if ever. There's more options available for media than there likely were when they first signed up for Netflix ... and if those competitors are smart, they'll target those customers to ensure they're aware of the alternatives.
- smoyer 15y ago
  We switched to the streaming-only plan before our billing cycle and have been happy ... We weren't good at quickly watching the DVDs and returning them anyway plus we saved a buck a month. How did other HNers respond to the price hike? I would expect this group to be dominated by streamers anyway.
  - ctdonath 15y ago
    Having a couple discs rotting on the shelf for a month or so before watching seemed a good indicator to cancel, but having gone thru the trouble of setting up two queues with 300+ titles I wasn't keen on losing that list and the eternal hope of someday getting to those movies. For a couple bucks more a month I'd retain the lists and, someday, watch the movies. Then the split came. Quadrupling the price of "someday..." wasn't worth it. Copied the lists to a text file, and cancelled. Insofar as Netflix streaming doesn't have everything, iTunes (yay AppleTV!) has most everything else available on a whim for a mere $2-5/rental. With kids streaming their shows on demand (no scratches! no fingerprints! no oatmeal in the DVD player!) from a vast instant library, and me not watching much at all (but when I do, a few bucks for "this, now" works fine), one slick box fusing a few streaming video services (yay AppleTV!) works well. I'm not sure how Netflix intends to attract back the million or so who cancelled. We've adapted; why return?
dextorious 15y ago
That was fast.
- hugh3 15y ago
  Too slow for me though, I'd already cancelled my "Qwikster".
ansy 15y ago
As an outside observer, Netflix appears to be in a state of panic over the content providers playing hardball with it. Much like Google, Netflix has such a huge lead nobody wants to give it a fair break anymore. In many cases, companies won't even give it an unfair break. Without the support of content providers, Netflix went from disrupting the cable TV industry to playing catch up with HBO. Its only hope now is to produce some killer original content, license what it can, and sell its premium "channel" as a supplement rather than a replacement. All of the upside from its slowing DVD business will have to go into content production, which will eventually put it on even footing with HBO, Showtime, NBC, CBS, Fox, et al. If I had to guess, the original plan was to sell off Qwikster. Get the cash up front for the content push. But now that's not going to work, I guess they're just going to milk it until it's done instead.
- deleted 15y ago
  [deleted]
tonetheman 15y ago
At least they have the nuts to change it back
- paul9290 15y ago
  To me it seems like they are nuts - just wait for the upcoming SNL skits and late night talk shows having a field day with this!
angdis 15y ago
For now, they're far enough ahead of any real competition that the flip-flopping won't be too harmful in the short term. They have a great product and they know it. And, this isn't the first time Netflix pissed off customers. A few years back they tried to eliminate the ability to create multiple queues in one account-- they used some ridiculous excuse about technical issues. However, once Amazon and other comers start establishing themselves in the market, Netflix would do best to get its act together or perish.
- veyron 15y ago
  Though it should be said that blockbuster is now running ads that criticize quikster's move and the price increase
  - vsl2 15y ago
    Yes, but it should also be said that Blockbuster is offering its $10/month streaming service only to Dish Network customers. I don't think there are many people who are going to make the switch to Dish Network because of the ability to pay to stream a very limited library. If Blockbuster offered the streaming package to the general public (like Netflix), then we may have some real competition.
- digikata 15y ago
  At the time they back off of that, but I've been noticing of late that the secondary accounts aren't really working in an integrated manner. I used it to split the viewing habits of the kids and adults in my household. That split isn't supported by the streaming. And recently the secondary queues have been experiencing technical difficulties.... I've attended some technical presentations on Netflix's streaming infrastructure. It's very well executed. However, at the user interface to the queues, streaming, and dvd infrastructure, they seem to be having technical difficulty or are making some bad strategic decisions. It feels like the estimation is that it's too hard and they're backing away from supporting well integrated queues and/or they're underestimating the value of the integration they have provided to the user. I think it's hard to integrate, but in the end worth the work. The harder you make a customer work to access programming, the easier it is to evaluate other competing services.
mcculley 15y ago
This seems like a perfect example of a company that is too focused on what Wall Street thinks and not being able to deal with the bigger picture and plan for the long term.
- talmand 15y ago
  I disagree, I think they had a long-term goal in mind without considering the short-term consequences. I'm not a Wall Street guy and I could have told them their stock would tumble immediately. Why? That's easy, if you split off a significant amount of your business to a second company then the company is worth less the exact amount you are splitting off. For example, $200 million company splits off $75 million of its company to a second company. Original company is now worth $125 million instantly. Wall Street does not react well to that unless you can show such exponential growth that you'll make it up in a quarter or two. With their stock tumbling because of the price hike then anyone with any common sense would have known that this would increase the speed of the fall. In fact, the conspiracy theorist in me suggests that this was pushed in an effort to build cash by shorting the stock.
  - SoftwareMaven 15y ago
    That's not true. If company A is worth $200M and you split it, (assuming no other factors liked pissed off investors and/or customers) you'll have company A worth $125M and company B worth $75M. There is no reduction in the value of the companies. Investors get five shares in A and three shares in B for every eight shares they held. The problem here is everybody (customers, investors and pundits) thought it was a horrible idea. They thought the value of two separate companies was half the value of a single company. That is not the normal path when a company spins off a piece of itself.
    - talmand 15y ago
      Well, I would say that a value change of $200 million to $125 million is a reduction. Although I didn't assume that investors would automatically get shares in the new company to equal the value they lose in the original company. It's nice if it works out that way but I just don't assume that kind of thing.
paul9290 15y ago
At my friends today I checked the Netflix streaming catalog on her Roku. I was wondering if they were offering any better content, but nope it's still the same B grade level junk I canceled the service two months ago for. I know their content problem is not completely their fault, though if they offered higher priced plans I'm sure their content selection would improve. Different price points should be offered from $8 to $25 or maybe $30. Overall between these bi-polar business decisions and continual lack of good content I'm happily getting my content fix from other online outlets. I was a huge fan a year ago but in the summer it started to lose it's appeal.
- talmand 15y ago
  What do you mean not completely their fault? It's not their fault at all. What shows up on Netflix Instant is whatever they can get from the content providers. If the content you wish to see is not on Netflix then blame the creators of the content, not Netflix. I would bet that Netflix would be happy to have every commercially-created video content ever made available on their service. In much the same way their billing is greatly influenced by the decisions of the content creators. If the creators demand more money for content, well, for Netflix to maintain profitability then the charge for service must go up. Also, I guess what you want to see and what I want to see vary greatly as they just recently added about six new shows (of several seasons each) to their lineup that makes me happy and have gotten new seasons on others. But hey, to each their own I suppose.
  - paul9290 15y ago
    It's partly their fault. They are trying to maintain this cheap $8 a month flat fee, but that's not enough money in their pockets to secure HBO offerings, a better movie selection and for me a better TV selection. Hulu, YouTube and other streaming sites I won't mention offer me what I seek at no cost(Mac Mini connected to LCD TV). Though when I first started Netflix streaming in Nov. 2010 there were some great offerings (TV shows, super hero cartoon series & movies) though by this summer I just kept seeing more B grade level junk. Thus they lost me as a subscriber and Netflix promoter. There current bi-polar actions just seem like a company with a once strong brand name is imploding.
ck2 15y ago
Wouldn't market questionnaire testing of just 100 people saved them this expensive juggling act? Anyway, I fear streaming price increases next year for sure as all the media outlets start to gouge netflix and they pass it on. Best thing netflix can do is make sure consumers know which distributors are purposely giving them horrible contracts and that it's not netflix's fault.
- daimyoyo 15y ago
  100 customers is not remotely close to a large enough sample size to glean anything worth the hassle to do the test. 100,000 would be better, but then you're spending a huge amount of money for results that might add nothing to your research. The whole "faster horse" theory applies here.
  - sukuriant 15y ago
    http://www.publicagenda.org/pages/best-estimates-guide-sample-size-and-margin-error http://www.publicagenda.org/pages/best-estimates-guide-sampl... 100,000 is overkill. 1,000 is reasonably sufficient.
  - sbov 15y ago
    I don't see how "faster horse" theory applies to this experiment. The whole point of the faster horse theory is to look beyond your customer's assumptions to give them what they really want. Netflix wasn't looking to give their customers what they wanted, they were looking to inconvenience customers based upon internal logistics. In many ways they were violating the faster horse theory: asking us if we wanted better streaming service or better dvd service. They were focused on technical details (do you want a horse or car) rather than the bigger picture (better travel - I don't care if it's by car or horse or teleportation).
- jeffool 15y ago
  I wonder about the potential blowback of hounding problem distributors publicly, though. It's possible it could work a few times; get consumers to go after them. But I think some would have negative reactions. Kids gloves may well be the best bet.
deleted 15y ago
[deleted]
jkkramer 15y ago
As a customer, I'm happy. I loathed the idea of maintaining separate queues, to the point where I started writing a unified queue web app in preparation. As a developer, I wonder if they're still sticking to their plan to make the API streaming-only? [1] As much as I didn't like the idea of Qwikster, I was hoping it would provide a dependable DVD API. http://developer.netflix.com/blog/read/Upcoming_Changes_to_the_Open_API_Program http://developer.netflix.com/blog/read/Upcoming_Changes_to_t...
bostonpete 15y ago
I may be the only one who is disappointed by this. My impression (based on the analysis of someone smarter than me) was that Netflix was having trouble beefing up their on-demand selection b/c the studios were trying to put the screws to them based on their total revenues (not just streaming revenues). I was hopeful that with this switch, they'd finally be able to make progress on growing their on-demand catalog again...
jasonkolb 15y ago
If they really wanted to hang onto their customers they would bring down the cost of the one segment of their content they DO control--DVD by mail. As others have noted this is their saving grace to plug holes in their streaming lineup, they need to capitalize on it. Hell, give it to streaming customers at cost if they have to.
rfairfax 15y ago
What's going on at Netflix? If you ask employees, they'll tell you that the culture - often praised for its high performance standards - is a culture of fear. It's a product management-driven organization where PMs aren't afraid to use the poor performance card to remove subordinates who don't go along with their ideas. The emperor has no clothes. In Netflix's case, the emperor is any product manager. It's no wonder there was little pushback internally on Qwikster - the name or the concept. Who has the guts to say no? A company with a culture of fear is a company that is on a death spiral. Hopefully Mr. Hastings has the self-awareness to recognize this problem and the gumption to act on it.
- SoftwareMaven 15y ago
  I would hope Netflix would be a product management driven company. Companies that aren't make far more stupid decisions than companies that are. I'm not sure what that has to do with the rest of your post. The culture of fear, OTOH, is problematic in the extreme. It doesn't matter what the organization looks like if people are afraid to do and/or show their research for fear of pissing off the powers that be.
  - rfairfax 15y ago
    My point on the company being PM-driven was not that PM-driven on its own is necessarily bad. The point was that the organization responsible for ideas and their execution (in Netflix's case, product management) combined with a culture of fear is a bad thing. It means that ideas are not challenged or questioned to the extent that they should. Apologies for not making that clear ... and no offense to product management as a discipline or career choice.
- killerdark 15y ago
  A culture of fear only works on people that are unable straighten their finances out. No threat of being laid of has any meaning if you have 5 years of salary stashed away in cash (Netflix is located in Silicon Valley where competitive salaries are more than enough to establish this in a short period of time).
- 15y ago
aneth 15y ago
Failing loudly and often is going out of style from overexposure.
blhack 15y ago
The tone on this one is quite a bit different: http://blog.netflix.com/2011/10/dvds-will-be-staying-at-netflixcom.html http://blog.netflix.com/2011/10/dvds-will-be-staying-at-netf... The email that came a few weeks ago actually had me stop what I was doing and read it (I was walking in to grab coffee, and I stopped outside to finish the email). That message was full of excitement, and started with a proper "Dear Customers: I screwed up". Why haven't I gotten an email this morning saying something similar? This time you really did screw up. This time, I cancalled my service (And there is about 0 chance that I'm re-instating it)
- monochromatic 15y ago
  Why would this move cause you to cancel your service?
  - blhack 15y ago
    I cancelled my service when they announced qwikster. I was in the "Meh, I'll keep this around because it's only a few bucks a month, and, well...they do have all of the firefly episodes. Maybe the selection will get better eventually." I wasn't really using netflix very much, and the qwikster announcement caused me to re-evaluate wether it was actually a service I wanted. I have a feeling there was a lot of people in my shoes that cancelled.
  - suivix 15y ago
    Disdainful hipster syndrome?
- adharmad 15y ago
  You are right - he could have been a bit more polite and gracious. As it stands, he sounds like a petulant child who has been deined his favorite toy. All in all, its probably a good move for everyone (shareholders, customers) and even for Hastings, assuming his Steve Jobs delusion has ended.
cookiecaper 15y ago
That $300 stock price was extremely overinflated, especially for a company whose entire well-being rests squarely in the hands of the major media companies.
biff 15y ago
The problem with Netflix is the problem with a lot of companies: the customers are taken for granted. If you have a Netflix account, look at reviews of The Black Tower or The Tudors. For weeks they've been broken -- out-of-sync audio/video on The Black Tower, mislabeled episodes of The Tudors season 2, I guess Whale Wars was also mislabeled (http://www.reddit.com/r/netflix/comments/i74kw/after_a_few_completely_out_of_order_seasons_of/ http://www.reddit.com/r/netflix/comments/i74kw/after_a_few_c...). Use the standard form to notify Netflix of the problem or even complain directly into the reviews... you might as well talk to a brick wall. Same thing if you're upset that they constantly wait until right before a series is about to be pulled from instant streaming to post a notice. None of that would take any significant investment to fix, just a commitment to deliver an excellent customer experience. It's obviously not the reason why the stock price halved itself lately but I feel it demonstrates the sort of lazy arrogance towards the customer experience (as does the Quikster saga) that will ill serve the company when it faces some real competition over the next couple of years. (I did keep my 2 DVD + streaming plan through the rate increase though.)
- biff 15y ago
  Ah, looks like they finally fixed The Tudors problem anyway. Good news.
- Osiris 15y ago
  Speaking of weird streaming issues, they recently added a ton of Star Trek content, so I went back to watch Enterprise. About half the episodes in "HD" were 4:3 and the other half were 16:9. I know the show was filmed and broadcast in 16:9 HD, so why the hell did they encode some of the episodes in 4:3? With all the effort it takes to encode original content, you'd think they'd have really strict policies on how the content is encoded and QC procedures to make sure it's done right. Note: I canceled my streaming subscription in favor of Blu-Ray rentals.
Retreads 15y ago
For those who thought they would be OK with streaming-only or DVD-only Netflix: Congratulations on your price hike!
- ianferrel 15y ago
  You misunderstand. The streaming-only and DVD-only plans still exist. They're just offered on the same webpage.
vsl2 15y ago
Netflix, Spotify, Pandora, and pretty much any other digital media streaming service will likely face a problem at some point fighting with content providers about licensing costs. If you're a content provider, why would you want to take anything less for your content than everything Netflix could afford to pay? Particularly since there are other options (e.g. Amazon, Blockbuster) that could grow to compete with Netflix. It will be interesting to see how things play out between the media streamers and content providers. Unless a media streamer can get an essential monopoly on its market (e.g. Netflix in movie/TV, Spotify in music) to be able to set favorable terms, I think its going to be difficult for any streamer to be really successful. I agree with many others that Netflix is doing a fantastic job of destroying its public image and goodwill, which is opening the door for other companies to make a push. And their streaming selection is so limited - I got the streaming trial, but couldn't find a single movie on which I wanted to spend two hours of my life and cancelled the trial a week later having watched nothing. I can't imagine paying monthly fees for this library unless I wanted to watch a certain TV show - but I'd probably cancel again as soon as I finished that show.
hollerith 15y ago
In explaining the split, Hastings cited the need for the streaming business to stay focused. In other words, Netflix took away a convenience many customers wanted to address a need internal to Netflix's management. That's less than ideal, but I understand the need for the company to face up to reality and shortcomings in its capabilities. More worrying is what they did to the recommendation engine after the split. Although I have yet to decide whether the recommendation engine is worth my while, the positive PR created by the Netflix Prize convinced me at least to give it a sustained try (and to encourage a friend to give it a try) which means rating a whole mess of movies I had seen. Well, guess what? After the split, streaming-only customers cannot rate titles that are unavailable on the streaming service. For example, when I find myself on the streaming service's page for The Lord of the Rings: The Two Towers, I see a message that says, "The Lord of the Rings: The Two Towers is not available to watch instantly. Watch The Lord of the Rings: The Two Towers on DVD! Add unlimited DVDs for only $7.99 more a month." But I see no way to rate the movie. Also if Netflix's negotiations with content owners means Netflix loses the right to stream a movie I already rated, I guess I will no longer be able to use Netflix's web site to see that rating. In summary, as part of the split, Netflix management hobbled the recommendation engine for no good reason that I can see. Netflix seems to have lost sight of the fact that people use their service because of their interest in movies.
- mortenjorck 15y ago
  It's particularly bizarre that the UI doesn't simply display those movies in a similar manner to how unavailable discs have always been displayed: You can "save" them for when they become available, and you can most certainly rate them.
- pbreit 15y ago
  You'd think it wouldn't be that hard or hard on the UX/UI to add a button or filter of some sort.
- madebylaw 15y ago
  You actually can rate DVD only movies, but you have to click into the movie's actual page (where all the reviews and comments are) to do it...
pragmatic 15y ago
Wow. How can this get any worse. Netflix management has gone crazy. They took a brand that (in my eyes) was almost as venerable as Amazon and just thrashed it. They lost a ton of good will (and market capital). People (including me) used to love Netflix. They, like Amazon, always seemed to do the right thing for the customer. I'm sad. They are too few good companies in the world.
mathattack 15y ago
Great companies can overcome Marketing mistakes. Coca-Cola was one of the world's great marketers. How else can they get you to pay so much for water + sugar + a jolt? (And how do they charge more for water than Exxon charges for gasoline?) They made a huge blunder in the 80s abandoning the classic formula, with a New Coke that was better by all objective measures. Despite all their market research telling them how good it would be (blind tests, etc) their customers revolted. Shortly thereafter, they backed out of the decision. The Chief Marketing Officer (Sergio Zyman) even turned lemons into lemonade, making a career as, "What we learned when we got New Coke wrong." Netflix made an awful decision. If they were a large static company (or government!) they would have had a hard time backing out of the decision. I'm sure there was plenty of research and consulting powerpoints explaining why it was a good idea, so everyone was covered. Unfortunately, it was a decision that could have destroyed the company. Bravo for Netflix acting decisively and correcting it's course! They likely saved the company.
- yalogin 15y ago
  It did reverse its decision but it did a lot of damage in the few weeks. First it kind of jolted people into rethinking their DVD subscription and more importantly gave people a reason to look at their competition in streaming. Amazon delivered the killer blow in my opinion. Their kindle bundled with media made Netflix reconsider quickly since now many people will see they are getting a better deal with Amazon even in the streaming realm (even they have no idea what Amazon's content will look like).
  - mathattack 15y ago
    If you are getting mocked by the Onion - then yes indeed, there was some damage. :-) http://www.theonion.com/articles/netflix-switches-over-to-convenient-new-physical-l,19271/ http://www.theonion.com/articles/netflix-switches-over-to-co...
    - chc 15y ago
      That's from February. Nothing to do with recent events.
ascendant 15y ago
Netflix made a bad decision, listened to the complaints of their customer base and reversed course on said bad decision. Not sure why that's such a huge ordeal.
- yoda_sl 15y ago
  Simply because doing some research will have yield the same results without a public embarassment! Netflix is quite a big player in user focus group and testing different scenario before launching new features, but in this case: total FAIL. Netflix constantly do major A/B testing on their web site to see if any minor changes had impact on their users. They even have a conference room for getting user focus group together and watch folks going over some new Netflix features... Looks like none of that experience was used in the Qwikster case.
- CamperBob 15y ago
  Netflix is an established public company with experienced professional management. It isn't appropriate for them to thrash around spastically like some kid who's putting up his first web site.
davidrchen 15y ago
This reminds me of when Gap tried to change their logo; making an unnecessary change that consumers didn't ask for. It's good they righted their mistake because nobody will be talking about this in 6 months.
Osiris 15y ago
I'm really surprised by all the mistakes Netflix has been making lately. The mistakes aren't necessarily the direction they are taking the business, but how they are communicating that with their customers. Couldn't they have done a little market research and discussed some of their ideas with existing customers to solicit feedback and determine if what they were thinking was going to be accepted by their client base? Microsoft does this all the time, and I'm sure many other companies do. Instead, Netflix is making hugely public announcements about changes in service, and then backpeddling or apologizing when their customers get upset.
spacemanaki 15y ago
Something that's totally missing from Netflix's blogpost is any mention of the video games rental they were going to introduce with Qwikster. The NY Times piece only quoted someone saying it may or may not happen, which is disappointing. From what I've read the current games-rental-by-mail offerings kind of suck, which is why I've never bothered to try it. I'm kind of interested in a Netflix-version of this so I hope they go forward with it. I was actually almost ok with the split, and prepared to subscribe to both, specifically because they were going to add games.
dennisgorelik 15y ago
Qwikster was "Lean Startup" methodology in action: Netflix did not develop anything for Qwikster, but got meaningful feedback [and reconsidered].
conspiracyview 15y ago
Reed made a $100MM shorting the stock via a proxy and will make another $50MM+ as it rebounds. This in fact was the only way to save the company. IF it doesn't make sense, it is a conspiracy by default.
losvedir 15y ago
Huh, I was one of the few who thought Qwikster was a good idea. I even bought stock a day after the announcement. Now what? I was convinced that this was bitter medicine, but impressed that Reed Hastings was doing it. I figured if they separated out Qwikster, a solid, cash-generating business, they could sell it to raise capital to buy better streaming content. I only use Netflix streaming, and Reed has stated from practically the very beginning that his vision was streaming in the future. DVDs clearly (at some point) will no longer exist, and I thought selling off that business now, while it still had some legs, was a good move for the long, long term. Maybe they had a suitor for the DVD business that backed off. Or maybe it really was a change of mind. I don't know, but I'm disappointed overall.
dasil003 15y ago
They were just too ambitious is all. Hastings knows that streaming is the future, and he went into startup mode to try to turn his ship in that direction. The two problems are customer expectations and movies studios demands. Customer expectations are a bitch because people believe $10 is the right price for Netflix and $16 is outrageous, even though this is a fraction of the cost of all traditional options. Now that expectations are set, price hikes just enrage people. But for a good selection of streaming content, people are going to have to be enraged for a while. We already saw what happened to Hulu. The reality is that studios are not going to let their revenues be decimated just so that we can live in our utopian future of streaming anything we want for $10/month. That is such a kick in their gut that they will be willing to spend the money to all build their own shitty services that fail over the next 4-5 years, put up with rampant piracy, and take any number of viewer-hostile actions all to avoid accepting Netflix's vision. Eventually I believe the market will cut them down to size, but getting everything you want is going to cost more than $10/month. I give Reed Hastings a lot of credit for trying to bring the future faster by focusing on streaming, but he overplayed his hand. Netflix's clout comes from its user base size and the fact that it's DVD business is unassailable by big media. They're not going to be able to throw their weight around on streaming deals, and studios will be dragging their feet anyway. The smart thing to do is to focus on streaming and always be aware that it's the future, but keep DVDs as a value anchor so customers can justify the mediocre streaming selection.
powertower 15y ago
> And that price hike is what kicked off the company’s tumble from a peak of $300 a share. Nonsense. Losing 1M out of 25M customers while increasing profit does not translate to loosing $200 from a $300 share price. This bad news is nothing more than an excuse for insiders to sell shares that they otherwise would not be able to do. There are more problems deeper inside.
wycats 15y ago
The mistake Netflix made was adding in streaming to its DVDs-by-mail brand in the first place. Had they launched Qwikster instead of adding Instant to Netflix, Qwikster would almost certainly be a strong brand today, probably the leading streaming movie brand. If you doubt this, take a look at Hulu. Hulu's a strong streaming TV brand because of its content deals; it didn't need to tack on the names of its industry sponsors to become the place to go for streaming TV. Now Netflix is saddled with trying to be two things at once. Just because one company is trying to do two things doesn't mean it needs to stuff them both into a single brand.
igorgue 15y ago
That was more like an abortion.
goodweeds 15y ago
When I heard about this, I canceled the DVD service and sent back the 5 dvds that had been on my bookshelf for 3 years. Then I started using the streaming service again, and got frustrated. Silverlight is pretty bad, especially with it's bizarre volume limitations. I realized that Netflix's streaming quality matches it's streaming catalogue, in other words, it sucks, and I canceled. Had all of these shenanigans not happened I probably would have been too lazy to cancel Netflix for another year or two. Dear Reed, Thanks for reminding me that Netflix sucks and I'd rather read or exercise than watch movies!
ams6110 15y ago
So just because they are ditching the Qwikster branding and keeping both DVDs and streaming under one umbrella website, do we know that they are not still spinning off the DVD business as an affiliated but largely separate business operation? Seems to me they could achieve most of their perceived advantages of splitting up, while keeping netflix.com as a common storefront portal.
chrchang 15y ago
And so Netflix blinks. They are getting desperate. Will the subscriber count increase as a result of this backtracking? My guess is no. There is still the issue of the massive rise in rates, and the overwhelming negative consumer sentiment right now. This must be reflected in the stock price which ended down 5%.
waterlesscloud 15y ago
For Sale: Domain name, never used. (Apologies to EH).
jeffwhelpley 15y ago
Not many companies can ignore their customers, shove an idea down their throats and they respond positively. Netflix is no Apple.

384 points by sajid 15y ago

runn1ng 15y ago

OK. Netflix really doesn't know what it's doing.

Bloodwine 15y ago
As a Netflix customer I applaud their 180 turnaround on their Qwikster plans. It doesn't matter to me if their flip-flop makes them seem a little scatterbrained, because the decision to keep both services bundled together makes the most sense. Perhaps they realized that if they spin off their DVD business that there would be blood in the water and the likes of Amazon Prime and Blockbuster would feast at their expense. While I do think that online streaming is preferable to DVDs-by-mail, the fact is that there isn't enough online content available for streaming and the DVDs nicely fill in the gaps and I honestly don't think DVDs-by-mail will die off as quickly as they first thought. It makes sense to keep DVDs-by-mail until their online streaming selection is much more broad, diverse, and containing a lot more quality content.
funkah 15y ago
That was my first reaction too, but this was really a "damned if you do, damned if you don't" situation for Netflix. People were pissed at the change, and changing it back makes Netflix look bad. So, might as well take the option that users prefer.
gjm11 15y ago
Near-universal consensus has it that they didn't know what they were doing when they decided to split off Qwikster. Better to admit now that they didn't know what they were doing, than to keep doing something wrong for fear of admitting to a past mistake. If the split was a mistake, then any embarrassment about correcting it now will be orders of magnitude less expensive to them than failing to correct it.

guelo 15y ago

From the nytimes article [1] it sounds like the investors let him have it "Three days after the announcement, Mr. Hastings wrote in a Facebook status update, “In Wyoming with 10 investors at a ranch/retreat. I think I might need a food taster. I can hardly blame them.” [1] http://mediadecoder.blogs.nytimes.com/2011/10/10/netflix-abandons-plan-to-rent-dvds-on-qwikster/# http://mediadecoder.blogs.nytimes.com/2011/10/10/netflix-aba...

ramanujan 15y ago
For anyone else who didn't get this right away: by "a food taster", he means that he thought someone might have poisoned his food. (It only took me a second, but it's not that common a usage today.)

uptown 15y ago

While this rights the ship, Netflix made the colossal mistake of rocking the recurring-billing boat. Smart businesses know that when you've got a customer setup for recurring monthly billing, there's a certain percentage of these customers who will continue to pay even though they're not actively using the service. Part of it is laziness of figuring out how to cancel. Another part is the thought that they may someday use the service more than they are. This has been the model for gyms forever. What Netflix did was force people to re-evaluate whether they truly were getting what they paid for, and in the process they added complexity to their branding by spinning off part of the service into a hard-to-spell company that had nothing buy a landing page. While this may be good for today's stock price, I suspect many of Netflix's customers that re-evaluated their needs may not come back for quite a while ... if ever. There's more options available for media than there likely were when they first signed up for Netflix ... and if those competitors are smart, they'll target those customers to ensure they're aware of the alternatives.

smoyer 15y ago
We switched to the streaming-only plan before our billing cycle and have been happy ... We weren't good at quickly watching the DVDs and returning them anyway plus we saved a buck a month. How did other HNers respond to the price hike? I would expect this group to be dominated by streamers anyway.
- ctdonath 15y ago
  Having a couple discs rotting on the shelf for a month or so before watching seemed a good indicator to cancel, but having gone thru the trouble of setting up two queues with 300+ titles I wasn't keen on losing that list and the eternal hope of someday getting to those movies. For a couple bucks more a month I'd retain the lists and, someday, watch the movies. Then the split came. Quadrupling the price of "someday..." wasn't worth it. Copied the lists to a text file, and cancelled. Insofar as Netflix streaming doesn't have everything, iTunes (yay AppleTV!) has most everything else available on a whim for a mere $2-5/rental. With kids streaming their shows on demand (no scratches! no fingerprints! no oatmeal in the DVD player!) from a vast instant library, and me not watching much at all (but when I do, a few bucks for "this, now" works fine), one slick box fusing a few streaming video services (yay AppleTV!) works well. I'm not sure how Netflix intends to attract back the million or so who cancelled. We've adapted; why return?

dextorious 15y ago

That was fast.

hugh3 15y ago
Too slow for me though, I'd already cancelled my "Qwikster".

ansy 15y ago

As an outside observer, Netflix appears to be in a state of panic over the content providers playing hardball with it. Much like Google, Netflix has such a huge lead nobody wants to give it a fair break anymore. In many cases, companies won't even give it an unfair break. Without the support of content providers, Netflix went from disrupting the cable TV industry to playing catch up with HBO. Its only hope now is to produce some killer original content, license what it can, and sell its premium "channel" as a supplement rather than a replacement. All of the upside from its slowing DVD business will have to go into content production, which will eventually put it on even footing with HBO, Showtime, NBC, CBS, Fox, et al. If I had to guess, the original plan was to sell off Qwikster. Get the cash up front for the content push. But now that's not going to work, I guess they're just going to milk it until it's done instead.

deleted 15y ago
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tonetheman 15y ago

At least they have the nuts to change it back

paul9290 15y ago
To me it seems like they are nuts - just wait for the upcoming SNL skits and late night talk shows having a field day with this!

angdis 15y ago

For now, they're far enough ahead of any real competition that the flip-flopping won't be too harmful in the short term. They have a great product and they know it. And, this isn't the first time Netflix pissed off customers. A few years back they tried to eliminate the ability to create multiple queues in one account-- they used some ridiculous excuse about technical issues. However, once Amazon and other comers start establishing themselves in the market, Netflix would do best to get its act together or perish.

veyron 15y ago
Though it should be said that blockbuster is now running ads that criticize quikster's move and the price increase
- vsl2 15y ago
  Yes, but it should also be said that Blockbuster is offering its $10/month streaming service only to Dish Network customers. I don't think there are many people who are going to make the switch to Dish Network because of the ability to pay to stream a very limited library. If Blockbuster offered the streaming package to the general public (like Netflix), then we may have some real competition.
digikata 15y ago
At the time they back off of that, but I've been noticing of late that the secondary accounts aren't really working in an integrated manner. I used it to split the viewing habits of the kids and adults in my household. That split isn't supported by the streaming. And recently the secondary queues have been experiencing technical difficulties.... I've attended some technical presentations on Netflix's streaming infrastructure. It's very well executed. However, at the user interface to the queues, streaming, and dvd infrastructure, they seem to be having technical difficulty or are making some bad strategic decisions. It feels like the estimation is that it's too hard and they're backing away from supporting well integrated queues and/or they're underestimating the value of the integration they have provided to the user. I think it's hard to integrate, but in the end worth the work. The harder you make a customer work to access programming, the easier it is to evaluate other competing services.

mcculley 15y ago

This seems like a perfect example of a company that is too focused on what Wall Street thinks and not being able to deal with the bigger picture and plan for the long term.

talmand 15y ago
I disagree, I think they had a long-term goal in mind without considering the short-term consequences. I'm not a Wall Street guy and I could have told them their stock would tumble immediately. Why? That's easy, if you split off a significant amount of your business to a second company then the company is worth less the exact amount you are splitting off. For example, $200 million company splits off $75 million of its company to a second company. Original company is now worth $125 million instantly. Wall Street does not react well to that unless you can show such exponential growth that you'll make it up in a quarter or two. With their stock tumbling because of the price hike then anyone with any common sense would have known that this would increase the speed of the fall. In fact, the conspiracy theorist in me suggests that this was pushed in an effort to build cash by shorting the stock.
- SoftwareMaven 15y ago
  That's not true. If company A is worth $200M and you split it, (assuming no other factors liked pissed off investors and/or customers) you'll have company A worth $125M and company B worth $75M. There is no reduction in the value of the companies. Investors get five shares in A and three shares in B for every eight shares they held. The problem here is everybody (customers, investors and pundits) thought it was a horrible idea. They thought the value of two separate companies was half the value of a single company. That is not the normal path when a company spins off a piece of itself.
  - talmand 15y ago
    Well, I would say that a value change of $200 million to $125 million is a reduction. Although I didn't assume that investors would automatically get shares in the new company to equal the value they lose in the original company. It's nice if it works out that way but I just don't assume that kind of thing.

paul9290 15y ago

At my friends today I checked the Netflix streaming catalog on her Roku. I was wondering if they were offering any better content, but nope it's still the same B grade level junk I canceled the service two months ago for. I know their content problem is not completely their fault, though if they offered higher priced plans I'm sure their content selection would improve. Different price points should be offered from $8 to $25 or maybe $30. Overall between these bi-polar business decisions and continual lack of good content I'm happily getting my content fix from other online outlets. I was a huge fan a year ago but in the summer it started to lose it's appeal.

talmand 15y ago
What do you mean not completely their fault? It's not their fault at all. What shows up on Netflix Instant is whatever they can get from the content providers. If the content you wish to see is not on Netflix then blame the creators of the content, not Netflix. I would bet that Netflix would be happy to have every commercially-created video content ever made available on their service. In much the same way their billing is greatly influenced by the decisions of the content creators. If the creators demand more money for content, well, for Netflix to maintain profitability then the charge for service must go up. Also, I guess what you want to see and what I want to see vary greatly as they just recently added about six new shows (of several seasons each) to their lineup that makes me happy and have gotten new seasons on others. But hey, to each their own I suppose.
- paul9290 15y ago
  It's partly their fault. They are trying to maintain this cheap $8 a month flat fee, but that's not enough money in their pockets to secure HBO offerings, a better movie selection and for me a better TV selection. Hulu, YouTube and other streaming sites I won't mention offer me what I seek at no cost(Mac Mini connected to LCD TV). Though when I first started Netflix streaming in Nov. 2010 there were some great offerings (TV shows, super hero cartoon series & movies) though by this summer I just kept seeing more B grade level junk. Thus they lost me as a subscriber and Netflix promoter. There current bi-polar actions just seem like a company with a once strong brand name is imploding.

ck2 15y ago

Wouldn't market questionnaire testing of just 100 people saved them this expensive juggling act? Anyway, I fear streaming price increases next year for sure as all the media outlets start to gouge netflix and they pass it on. Best thing netflix can do is make sure consumers know which distributors are purposely giving them horrible contracts and that it's not netflix's fault.

daimyoyo 15y ago
100 customers is not remotely close to a large enough sample size to glean anything worth the hassle to do the test. 100,000 would be better, but then you're spending a huge amount of money for results that might add nothing to your research. The whole "faster horse" theory applies here.
- sukuriant 15y ago
  http://www.publicagenda.org/pages/best-estimates-guide-sample-size-and-margin-error http://www.publicagenda.org/pages/best-estimates-guide-sampl... 100,000 is overkill. 1,000 is reasonably sufficient.
- sbov 15y ago
  I don't see how "faster horse" theory applies to this experiment. The whole point of the faster horse theory is to look beyond your customer's assumptions to give them what they really want. Netflix wasn't looking to give their customers what they wanted, they were looking to inconvenience customers based upon internal logistics. In many ways they were violating the faster horse theory: asking us if we wanted better streaming service or better dvd service. They were focused on technical details (do you want a horse or car) rather than the bigger picture (better travel - I don't care if it's by car or horse or teleportation).
jeffool 15y ago
I wonder about the potential blowback of hounding problem distributors publicly, though. It's possible it could work a few times; get consumers to go after them. But I think some would have negative reactions. Kids gloves may well be the best bet.

deleted 15y ago

[deleted]

jkkramer 15y ago

As a customer, I'm happy. I loathed the idea of maintaining separate queues, to the point where I started writing a unified queue web app in preparation. As a developer, I wonder if they're still sticking to their plan to make the API streaming-only? [1] As much as I didn't like the idea of Qwikster, I was hoping it would provide a dependable DVD API. http://developer.netflix.com/blog/read/Upcoming_Changes_to_the_Open_API_Program http://developer.netflix.com/blog/read/Upcoming_Changes_to_t...

bostonpete 15y ago

I may be the only one who is disappointed by this. My impression (based on the analysis of someone smarter than me) was that Netflix was having trouble beefing up their on-demand selection b/c the studios were trying to put the screws to them based on their total revenues (not just streaming revenues). I was hopeful that with this switch, they'd finally be able to make progress on growing their on-demand catalog again...

jasonkolb 15y ago

If they really wanted to hang onto their customers they would bring down the cost of the one segment of their content they DO control--DVD by mail. As others have noted this is their saving grace to plug holes in their streaming lineup, they need to capitalize on it. Hell, give it to streaming customers at cost if they have to.

rfairfax 15y ago

What's going on at Netflix? If you ask employees, they'll tell you that the culture - often praised for its high performance standards - is a culture of fear. It's a product management-driven organization where PMs aren't afraid to use the poor performance card to remove subordinates who don't go along with their ideas. The emperor has no clothes. In Netflix's case, the emperor is any product manager. It's no wonder there was little pushback internally on Qwikster - the name or the concept. Who has the guts to say no? A company with a culture of fear is a company that is on a death spiral. Hopefully Mr. Hastings has the self-awareness to recognize this problem and the gumption to act on it.

SoftwareMaven 15y ago
I would hope Netflix would be a product management driven company. Companies that aren't make far more stupid decisions than companies that are. I'm not sure what that has to do with the rest of your post. The culture of fear, OTOH, is problematic in the extreme. It doesn't matter what the organization looks like if people are afraid to do and/or show their research for fear of pissing off the powers that be.
- rfairfax 15y ago
  My point on the company being PM-driven was not that PM-driven on its own is necessarily bad. The point was that the organization responsible for ideas and their execution (in Netflix's case, product management) combined with a culture of fear is a bad thing. It means that ideas are not challenged or questioned to the extent that they should. Apologies for not making that clear ... and no offense to product management as a discipline or career choice.
killerdark 15y ago
A culture of fear only works on people that are unable straighten their finances out. No threat of being laid of has any meaning if you have 5 years of salary stashed away in cash (Netflix is located in Silicon Valley where competitive salaries are more than enough to establish this in a short period of time).
15y ago

aneth 15y ago

Failing loudly and often is going out of style from overexposure.

blhack 15y ago

The tone on this one is quite a bit different: http://blog.netflix.com/2011/10/dvds-will-be-staying-at-netflixcom.html http://blog.netflix.com/2011/10/dvds-will-be-staying-at-netf... The email that came a few weeks ago actually had me stop what I was doing and read it (I was walking in to grab coffee, and I stopped outside to finish the email). That message was full of excitement, and started with a proper "Dear Customers: I screwed up". Why haven't I gotten an email this morning saying something similar? This time you really did screw up. This time, I cancalled my service (And there is about 0 chance that I'm re-instating it)

monochromatic 15y ago
Why would this move cause you to cancel your service?
- blhack 15y ago
  I cancelled my service when they announced qwikster. I was in the "Meh, I'll keep this around because it's only a few bucks a month, and, well...they do have all of the firefly episodes. Maybe the selection will get better eventually." I wasn't really using netflix very much, and the qwikster announcement caused me to re-evaluate wether it was actually a service I wanted. I have a feeling there was a lot of people in my shoes that cancelled.
- suivix 15y ago
  Disdainful hipster syndrome?
adharmad 15y ago
You are right - he could have been a bit more polite and gracious. As it stands, he sounds like a petulant child who has been deined his favorite toy. All in all, its probably a good move for everyone (shareholders, customers) and even for Hastings, assuming his Steve Jobs delusion has ended.

cookiecaper 15y ago

That $300 stock price was extremely overinflated, especially for a company whose entire well-being rests squarely in the hands of the major media companies.

biff 15y ago

The problem with Netflix is the problem with a lot of companies: the customers are taken for granted. If you have a Netflix account, look at reviews of The Black Tower or The Tudors. For weeks they've been broken -- out-of-sync audio/video on The Black Tower, mislabeled episodes of The Tudors season 2, I guess Whale Wars was also mislabeled (http://www.reddit.com/r/netflix/comments/i74kw/after_a_few_completely_out_of_order_seasons_of/ http://www.reddit.com/r/netflix/comments/i74kw/after_a_few_c...). Use the standard form to notify Netflix of the problem or even complain directly into the reviews... you might as well talk to a brick wall. Same thing if you're upset that they constantly wait until right before a series is about to be pulled from instant streaming to post a notice. None of that would take any significant investment to fix, just a commitment to deliver an excellent customer experience. It's obviously not the reason why the stock price halved itself lately but I feel it demonstrates the sort of lazy arrogance towards the customer experience (as does the Quikster saga) that will ill serve the company when it faces some real competition over the next couple of years. (I did keep my 2 DVD + streaming plan through the rate increase though.)

biff 15y ago
Ah, looks like they finally fixed The Tudors problem anyway. Good news.
Osiris 15y ago
Speaking of weird streaming issues, they recently added a ton of Star Trek content, so I went back to watch Enterprise. About half the episodes in "HD" were 4:3 and the other half were 16:9. I know the show was filmed and broadcast in 16:9 HD, so why the hell did they encode some of the episodes in 4:3? With all the effort it takes to encode original content, you'd think they'd have really strict policies on how the content is encoded and QC procedures to make sure it's done right. Note: I canceled my streaming subscription in favor of Blu-Ray rentals.

Retreads 15y ago

For those who thought they would be OK with streaming-only or DVD-only Netflix: Congratulations on your price hike!

ianferrel 15y ago
You misunderstand. The streaming-only and DVD-only plans still exist. They're just offered on the same webpage.

vsl2 15y ago

Netflix, Spotify, Pandora, and pretty much any other digital media streaming service will likely face a problem at some point fighting with content providers about licensing costs. If you're a content provider, why would you want to take anything less for your content than everything Netflix could afford to pay? Particularly since there are other options (e.g. Amazon, Blockbuster) that could grow to compete with Netflix. It will be interesting to see how things play out between the media streamers and content providers. Unless a media streamer can get an essential monopoly on its market (e.g. Netflix in movie/TV, Spotify in music) to be able to set favorable terms, I think its going to be difficult for any streamer to be really successful. I agree with many others that Netflix is doing a fantastic job of destroying its public image and goodwill, which is opening the door for other companies to make a push. And their streaming selection is so limited - I got the streaming trial, but couldn't find a single movie on which I wanted to spend two hours of my life and cancelled the trial a week later having watched nothing. I can't imagine paying monthly fees for this library unless I wanted to watch a certain TV show - but I'd probably cancel again as soon as I finished that show.

hollerith 15y ago

In explaining the split, Hastings cited the need for the streaming business to stay focused. In other words, Netflix took away a convenience many customers wanted to address a need internal to Netflix's management. That's less than ideal, but I understand the need for the company to face up to reality and shortcomings in its capabilities. More worrying is what they did to the recommendation engine after the split. Although I have yet to decide whether the recommendation engine is worth my while, the positive PR created by the Netflix Prize convinced me at least to give it a sustained try (and to encourage a friend to give it a try) which means rating a whole mess of movies I had seen. Well, guess what? After the split, streaming-only customers cannot rate titles that are unavailable on the streaming service. For example, when I find myself on the streaming service's page for The Lord of the Rings: The Two Towers, I see a message that says, "The Lord of the Rings: The Two Towers is not available to watch instantly. Watch The Lord of the Rings: The Two Towers on DVD! Add unlimited DVDs for only $7.99 more a month." But I see no way to rate the movie. Also if Netflix's negotiations with content owners means Netflix loses the right to stream a movie I already rated, I guess I will no longer be able to use Netflix's web site to see that rating. In summary, as part of the split, Netflix management hobbled the recommendation engine for no good reason that I can see. Netflix seems to have lost sight of the fact that people use their service because of their interest in movies.

mortenjorck 15y ago
It's particularly bizarre that the UI doesn't simply display those movies in a similar manner to how unavailable discs have always been displayed: You can "save" them for when they become available, and you can most certainly rate them.
pbreit 15y ago
You'd think it wouldn't be that hard or hard on the UX/UI to add a button or filter of some sort.
madebylaw 15y ago
You actually can rate DVD only movies, but you have to click into the movie's actual page (where all the reviews and comments are) to do it...

pragmatic 15y ago

Wow. How can this get any worse. Netflix management has gone crazy. They took a brand that (in my eyes) was almost as venerable as Amazon and just thrashed it. They lost a ton of good will (and market capital). People (including me) used to love Netflix. They, like Amazon, always seemed to do the right thing for the customer. I'm sad. They are too few good companies in the world.

mathattack 15y ago

Great companies can overcome Marketing mistakes. Coca-Cola was one of the world's great marketers. How else can they get you to pay so much for water + sugar + a jolt? (And how do they charge more for water than Exxon charges for gasoline?) They made a huge blunder in the 80s abandoning the classic formula, with a New Coke that was better by all objective measures. Despite all their market research telling them how good it would be (blind tests, etc) their customers revolted. Shortly thereafter, they backed out of the decision. The Chief Marketing Officer (Sergio Zyman) even turned lemons into lemonade, making a career as, "What we learned when we got New Coke wrong." Netflix made an awful decision. If they were a large static company (or government!) they would have had a hard time backing out of the decision. I'm sure there was plenty of research and consulting powerpoints explaining why it was a good idea, so everyone was covered. Unfortunately, it was a decision that could have destroyed the company. Bravo for Netflix acting decisively and correcting it's course! They likely saved the company.

yalogin 15y ago
It did reverse its decision but it did a lot of damage in the few weeks. First it kind of jolted people into rethinking their DVD subscription and more importantly gave people a reason to look at their competition in streaming. Amazon delivered the killer blow in my opinion. Their kindle bundled with media made Netflix reconsider quickly since now many people will see they are getting a better deal with Amazon even in the streaming realm (even they have no idea what Amazon's content will look like).
- mathattack 15y ago
  If you are getting mocked by the Onion - then yes indeed, there was some damage. :-) http://www.theonion.com/articles/netflix-switches-over-to-convenient-new-physical-l,19271/ http://www.theonion.com/articles/netflix-switches-over-to-co...
  - chc 15y ago
    That's from February. Nothing to do with recent events.

ascendant 15y ago

Netflix made a bad decision, listened to the complaints of their customer base and reversed course on said bad decision. Not sure why that's such a huge ordeal.

yoda_sl 15y ago
Simply because doing some research will have yield the same results without a public embarassment! Netflix is quite a big player in user focus group and testing different scenario before launching new features, but in this case: total FAIL. Netflix constantly do major A/B testing on their web site to see if any minor changes had impact on their users. They even have a conference room for getting user focus group together and watch folks going over some new Netflix features... Looks like none of that experience was used in the Qwikster case.
CamperBob 15y ago
Netflix is an established public company with experienced professional management. It isn't appropriate for them to thrash around spastically like some kid who's putting up his first web site.

davidrchen 15y ago

This reminds me of when Gap tried to change their logo; making an unnecessary change that consumers didn't ask for. It's good they righted their mistake because nobody will be talking about this in 6 months.

Osiris 15y ago

I'm really surprised by all the mistakes Netflix has been making lately. The mistakes aren't necessarily the direction they are taking the business, but how they are communicating that with their customers. Couldn't they have done a little market research and discussed some of their ideas with existing customers to solicit feedback and determine if what they were thinking was going to be accepted by their client base? Microsoft does this all the time, and I'm sure many other companies do. Instead, Netflix is making hugely public announcements about changes in service, and then backpeddling or apologizing when their customers get upset.

spacemanaki 15y ago

Something that's totally missing from Netflix's blogpost is any mention of the video games rental they were going to introduce with Qwikster. The NY Times piece only quoted someone saying it may or may not happen, which is disappointing. From what I've read the current games-rental-by-mail offerings kind of suck, which is why I've never bothered to try it. I'm kind of interested in a Netflix-version of this so I hope they go forward with it. I was actually almost ok with the split, and prepared to subscribe to both, specifically because they were going to add games.

dennisgorelik 15y ago

Qwikster was "Lean Startup" methodology in action: Netflix did not develop anything for Qwikster, but got meaningful feedback [and reconsidered].

conspiracyview 15y ago

Reed made a $100MM shorting the stock via a proxy and will make another $50MM+ as it rebounds. This in fact was the only way to save the company. IF it doesn't make sense, it is a conspiracy by default.

losvedir 15y ago

Huh, I was one of the few who thought Qwikster was a good idea. I even bought stock a day after the announcement. Now what? I was convinced that this was bitter medicine, but impressed that Reed Hastings was doing it. I figured if they separated out Qwikster, a solid, cash-generating business, they could sell it to raise capital to buy better streaming content. I only use Netflix streaming, and Reed has stated from practically the very beginning that his vision was streaming in the future. DVDs clearly (at some point) will no longer exist, and I thought selling off that business now, while it still had some legs, was a good move for the long, long term. Maybe they had a suitor for the DVD business that backed off. Or maybe it really was a change of mind. I don't know, but I'm disappointed overall.

dasil003 15y ago

They were just too ambitious is all. Hastings knows that streaming is the future, and he went into startup mode to try to turn his ship in that direction. The two problems are customer expectations and movies studios demands. Customer expectations are a bitch because people believe $10 is the right price for Netflix and $16 is outrageous, even though this is a fraction of the cost of all traditional options. Now that expectations are set, price hikes just enrage people. But for a good selection of streaming content, people are going to have to be enraged for a while. We already saw what happened to Hulu. The reality is that studios are not going to let their revenues be decimated just so that we can live in our utopian future of streaming anything we want for $10/month. That is such a kick in their gut that they will be willing to spend the money to all build their own shitty services that fail over the next 4-5 years, put up with rampant piracy, and take any number of viewer-hostile actions all to avoid accepting Netflix's vision. Eventually I believe the market will cut them down to size, but getting everything you want is going to cost more than $10/month. I give Reed Hastings a lot of credit for trying to bring the future faster by focusing on streaming, but he overplayed his hand. Netflix's clout comes from its user base size and the fact that it's DVD business is unassailable by big media. They're not going to be able to throw their weight around on streaming deals, and studios will be dragging their feet anyway. The smart thing to do is to focus on streaming and always be aware that it's the future, but keep DVDs as a value anchor so customers can justify the mediocre streaming selection.

powertower 15y ago

> And that price hike is what kicked off the company’s tumble from a peak of $300 a share. Nonsense. Losing 1M out of 25M customers while increasing profit does not translate to loosing $200 from a $300 share price. This bad news is nothing more than an excuse for insiders to sell shares that they otherwise would not be able to do. There are more problems deeper inside.

wycats 15y ago

The mistake Netflix made was adding in streaming to its DVDs-by-mail brand in the first place. Had they launched Qwikster instead of adding Instant to Netflix, Qwikster would almost certainly be a strong brand today, probably the leading streaming movie brand. If you doubt this, take a look at Hulu. Hulu's a strong streaming TV brand because of its content deals; it didn't need to tack on the names of its industry sponsors to become the place to go for streaming TV. Now Netflix is saddled with trying to be two things at once. Just because one company is trying to do two things doesn't mean it needs to stuff them both into a single brand.

igorgue 15y ago

That was more like an abortion.

goodweeds 15y ago

When I heard about this, I canceled the DVD service and sent back the 5 dvds that had been on my bookshelf for 3 years. Then I started using the streaming service again, and got frustrated. Silverlight is pretty bad, especially with it's bizarre volume limitations. I realized that Netflix's streaming quality matches it's streaming catalogue, in other words, it sucks, and I canceled. Had all of these shenanigans not happened I probably would have been too lazy to cancel Netflix for another year or two. Dear Reed, Thanks for reminding me that Netflix sucks and I'd rather read or exercise than watch movies!

ams6110 15y ago

So just because they are ditching the Qwikster branding and keeping both DVDs and streaming under one umbrella website, do we know that they are not still spinning off the DVD business as an affiliated but largely separate business operation? Seems to me they could achieve most of their perceived advantages of splitting up, while keeping netflix.com as a common storefront portal.

chrchang 15y ago

And so Netflix blinks. They are getting desperate. Will the subscriber count increase as a result of this backtracking? My guess is no. There is still the issue of the massive rise in rates, and the overwhelming negative consumer sentiment right now. This must be reflected in the stock price which ended down 5%.

waterlesscloud 15y ago

For Sale: Domain name, never used. (Apologies to EH).

jeffwhelpley 15y ago

Not many companies can ignore their customers, shove an idea down their throats and they respond positively. Netflix is no Apple.