Netflix CEO Reed Hastings published a blog post Sunday evening, apologizing for how the company handled its recent price increase. His thoughts undoubtedly were concentrated by the precipitous drop in Netflix’s share price late last week. Hastings also took the opportunity to announce that Andy Rendich has been promoted to CEO of the physical disc rental operations, however, and that this service will be rebranded as Qwikster within the next few weeks. Additionally, Qwikster will begin to offer video game rentals alongside movies and TV shows.
Hastings wrote that customers were understandably upset by the lack of communication about the major changes in advance of them being implemented. His philosophy with Netflix had been that actions speak louder than words, and that this served the company well when the changes were obviously an improvement to the service. But he now realizes that approach isn’t suitable for every occasion.
“I messed up. I owe everyone an explanation,” Hastings wrote. “It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology.”
That’s his only regret, however. Hastings wrote that dividing the two branches of the Netflix service would allow for a clearer focus on each part and therefore an improved service. He also asserted, rather less convincingly, that it would simplify things for subscribers.
“We realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently,” Hastings wrote. Therefore the new CEO, Andy Rendich, and the new DVD rental name, Qwikster.
Each service will have its own website, and there will be no integration between the two. Billing, subscriptions, ratings, reviews and everything else will be completely separate, so customers will have to deal with them as if they were two independent companies. Further details regarding the game rental service will be forthcoming in the near future.
Related Link:
http://blog.netflix.com/2011/09/explanation-and-some-reflections.html
Photo by flickr user Global X, used under Creative Commons license
