What Netflix Could Have Said This Week

http://www.appleoutsider.com/2011/09/20/netflixpr/

by barredo • 15 years ago

367 110 15 years 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.

wccrawford2• 15 years 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• 15 years 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• 15 years 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• 15 years ago

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

tyree7322• 15 years 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• 15 years 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.

brown9-22• 15 years 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.

Tloewald• 15 years 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.

ShawnJG2• 15 years 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.

jeffool• 15 years 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> !"

jobu• 15 years ago

Actually, this is might be a great area for a third party to get involved. Inveni (http://www.inveni.com/) already works with Netflix, IMDB, etc as a recommendation engine. It would be a pretty short step for them to start managing your Netflix/Qwickster queues.

brown9-22• 15 years ago

Back in June Netflix announced that they would be phasing out access to the DVD queue/movies in the API by the end of this year: http://techblog.netflix.com/2011/06/upcoming-changes-to-open...

Would be interesting to see if they have any plans to add that back, but otherwise, this type of solution sounds like it might not be possible.

foulmouthboy2• 15 years 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• 15 years 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.

uptown2• 15 years 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.

AdamTReineke2• 15 years ago

See also: Wii.

smackfu• 15 years ago

"I apologize! It's all my fault! And here's some other bad stuff, that's also my fault! What, you aren't happy I apologized?"

wccrawford2• 15 years 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• 15 years 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• 15 years 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• 15 years 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• 15 years ago

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

yesimahuman• 15 years 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• 15 years 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• 15 years 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• 15 years 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• 15 years 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.

BlazingFrog2• 15 years 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• 15 years 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• 15 years 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)

AdamTReineke2• 15 years 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....

June 30, 2008 - Nevermind - 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• 15 years 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.

Klinky2• 15 years 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.

c2• 15 years ago

In my 3 or so years as a Netflix subscriber I have noticed an extremely disturbing trend of Netflix killing useful features simply because they aren't good for the business.

I can think of 2 off the top of my head:

- You used to be able to easily access a page of latest release DVDs. They killed this page because "too many people were using it" - and they had a pretty audacious blog post assuring that now it is a better customer experience claiming "it caused contention to ship" - although I never had a problem and sorely missed the feature when it was gone

- You used to be able to see the top 50 streaming movies. It almost always had the top new hollywood blockbusters which I really wanted to see. This feature vanished one day with no explanation that I could find.

The new site redesign is also a good example, making it harder and harder to find the movies you actually want to watch.

For these reasons alone I was a relatively happy customer but I would never have invested in them as a company due to their lack of customer focus. This latest price fiasco was the nail in the coffin. I cancelled my membership.

For the price of the streaming plan, I will just watch one or two movies a month on Amazon Instant Video with a much bigger selection and much stronger customer focus. All the nice features which Netflix killed for no reason are featured prominently on the Amazon web page for starters.

kalid• 15 years ago

I cancelled my membership a while back also -- difficulty in finding content I actually wanted to watch was a huge factor.

It's almost like an insurance company -- they want you to buy their plan, but not actually use it! (Why, then they'd have to pay out to the movie studios!)

lukifer• 15 years 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.

joeguilmette3• 15 years 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• 15 years 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.

maratd2• 15 years 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.

BlazingFrog2• 15 years ago

I'm curious, do you have numbers backing the higher profitability of their streaming business over DVD-by-mail?

I do agree that, if they wanted to get rid of their original line of business without looking like that's what they were doing, this would be the best way.

sabat• 15 years ago

It wasn't botched. Everything is by design.

I hope so, but it doesn't appear that way. Netflix has alienated a large number of its customers.

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.

Those are different issues. No one probably cares much about those esoteric shows you're talking about, but they certainly do care about whether they can get mainstream movies if they're paying a monthly fee for streaming. And right now, it's a wasteland: B-movies, old movies, and some UFO documentaries. Starz sometimes added something of worth, but Netflix blew that deal -- Starz is gone.

If all this activity by Netflix is part of some intelligent design, I'd really like to understand it, because right now, it looks more like a suicide attempt.

jm4• 15 years ago

As a Netflix user for 5+ years, I for one can't wait until a viable competitor with equivalent selection emerges.

Not trying to single you out, but let me get this straight... You liked the service enough to keep it for 5 years, the service has not changed substantially to the point where competitors have suddenly become attractive and you still want to ditch them?

It's just the company's new strategy. Do I think it was a good idea? Not really. But it's not like they're killing people. Is this really a good reason to go all nerd rage on a company and start cancelling subscriptions?

ctdonath2• 15 years 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.

joeguilmette3• 15 years 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• 15 years 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.

rhizome• 15 years ago

I'm pretty sure they aren't going to throw that away, are you nuts? They had a big ol' contest a few years back to come up with a new recommendation algo.

Further to what I assume is your point, we have a few years of practice in linking accounts, so a particular user's historical data can easily be integrated with this new corporate architecture.

EDIT: I'm using the royal "we" to refer to technological techniques for linking accounts across disparate websites. I don't work for Netflix.

ShawnJG2• 15 years ago

Def unified queue. They are violating a golden rule. not giving the people what they want. They've lost the Value in Value Added Service.

As of today there stock is down 40% from when this whole debacle started.

RandallBrown• 15 years ago

I believe it was Henry Ford who said "If I'd asked customers what they wanted, they would have said "a faster horse"."

Sometimes you have to do something that customers might not "want" to get to something that they really do want. If this lets Netflix improve their streaming service without being bogged down by dvds then I'll be all for the change.

pyoung2• 15 years ago

My best guess as to why they are splitting the queues is due to the availability issues on the streaming side affecting customer 'morale', so to speak. i.e. when a streaming-only customer searches for a title, and then finds that it is only available on DVD, their perception of the service is diminished.

I think the end goal of this move is to kill off or sell the DVD portion of the service entirely, so by splitting the services, investors won't freak out when that eventually happens. This also is another reason for splitting the queues.

ctdonath2• 15 years ago

That is the main reason why I want a unified queue: inconsistent availability. I put "Scarface" on my queue, but being a low priority it's pretty far down; I was content that someday it would reach the top of the DVD queue and show up, or that on a whim I could hit "Play Now" and stream it. One day I noticed it was tagged for removal from streaming a few days hence, and didn't have time to watch it in the meantime. Streaming option disappeared. [shrug] Well, it's still available by DVD, I'll get to it. Then I get the "we're going to split the service" notice, note that I only watch 2-3 discs a month (lots of streaming instead) so the separate fee wasn't worth it and I canceled. Even if I want to pay a one-time rental to watch it, not available as an option and alternatives (sign up, get disc, cancel) are too much hassle now.

Huh, maybe I'll check Amazon, where I can buy "Scarface" new, buy it used, no-strings streaming rental, or maybe even Prime "free" streaming...and all from a single search...[clickety clickety]...ah, it's $3 to stream it once, and there's 53 purchasing/renting options from $0.01+shipping used VHS to $3 streaming rental to $700 including humidor. Pity it's not in the "free Prime streaming" option, but at least I know the options with one search.

qjz3• 15 years ago

When I put something in my DVD queue, it automatically appears in my streaming queue when it's available. This makes me happy, I watch the movie online, then delete it from my DVD queue. If the new system no longer supports this, it will affect my morale.

But I suspect you're right about killing off or selling the DVD service, and I think they're intentionally trying to sour customer opinion to bring about this end. It's a shame, because Netflix, as it previously existed, was one of the few subscription services I was happy to pay for. After the site redesign, everything's gone to hell (instantwatcher.com is the only useable interface I've found, on any platform). Oh, well, it was good while it lasted...

nollidge• 15 years ago

> when a streaming-only customer searches for a title, and then finds that it is only available on DVD

So now, they'll find... it's not available at all. How does that any better for customer morale?

soonerjm• 15 years ago

This. Ultimately, the splitting of the queues between two sites will be what drives me away from Netflix. As long as the streaming choices are only sporadically decent and intermittently available, having the DVD option as a backup is important.

Currently, if I come across anything I'd like to see at some point in the future, I add it to my Netflix queue and forget about it. I may watch it via streaming if and when available, or get it on DVD, or buy it...it doesn't really matter. The queue itself has value because it's a one stop shop for anything I may want to see (well, aside from things currently showing on television, which get added to Tivo in similar fashion).

Splitting the queues kills that convenience. Now I'll have to add it to multiple queues on different sites, and think about which list(s) something needs to be on, and maybe keep things in sync...it takes Netflix's single best feature to me and just kills it.

kemiller• 15 years ago

Really? When you're not limited to a few out at a time, and when they don't have to be physically delivered to you at a cost of 1-3 days, does the queue per se really matter so much anymore? I can see a lot of different ways to represent saved content for a streaming biz, but DVDs pretty much force an ordering. I almost never use my queue for streaming.

But ratings are another matter. Seems like they could syndicate that data back and forth.

metageek• 15 years ago

> I almost never use my queue for streaming.

On my Blu-Ray player, the queue is the only way to play anything.

meterplech• 15 years ago

I think a unified queue hurts the loyalty for instant queue people. Whenever I am on instant queue and I search for a movie and see that it's not available for instant I am annoyed. You could argue that it would help convert me to DVDs- but I know that it doesn't, especially afte the recent price hike. In fact, it really just makes me think about how Netflix streaming lacks material.

If they feel the true future of their product is in streaming than I think this makes sense. They aren't trying to hold onto the low-margin DVD my mail people. They are trying to encourage more streaming customers and move forward in a drastic way.

Maybe the better way to accomplish this is to make the netflix classic website as discussed in the article include the non-streaming movies and just have people with instant queue not even see other movies.

Regardless- I don't think one queue is necessarily better.

evolve2k• 15 years ago

I disagree I think a unified queue is where it is at. I want to keep my ratings linked with my queue and have social engagement around my queue also.

Services like goodfil.ms (http://goodfil.ms.) and GetGlue (http://getglue.com) are good at helping people discover and find films within their own networks.

Eventually streaming of films will become a commodity; Netflix, Apple, Hulu and the cable networks will all vie for market leadership of streaming; and IMHO whoever creates the best social queue is where the long term value is.

Facebook are clearly going to make a play at this with their Watch button - it'll be interesting to see how exactly, but it's not difficult to imagine them serving up "8 of your friends have watched Scarface" in place of their ads - then directing you through to Netflix for viewing.

DannoHung• 15 years ago

Unified queue nothing. I was talking with Adrian Cockroft at QCon last year and he said that Netflix would prefer to not have a queue for Instant Watch at all.

janesvilleseo• 15 years 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• 15 years 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• 15 years 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• 15 years ago

The gave their future competitor a pretty crappy name!

dugmartin• 15 years 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• 15 years 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• 15 years 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• 15 years 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.

lubujackson2• 15 years 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• 15 years 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.

lubujackson2• 15 years 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• 15 years 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• 15 years ago

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

brackin• 15 years 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• 15 years ago

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

spullara2• 15 years 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• 15 years ago

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

rglover• 15 years 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• 15 years 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• 15 years 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• 15 years 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• 15 years 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• 15 years ago

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

codeslush• 15 years ago

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

absconditus• 15 years ago

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

iradik• 15 years 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!

What Netflix Could Have Said This Week

Related Stories