Netflix CEO, Reed Hastings, wrote a blog post last night on the Netflix Blog announcing more changes coming to the Netflix services and apologizing for the lack of communication regarding the recent sequential big changes. (He must be forgetting his “communications” a year ago that offended both residents of Canada and the USA.)
In hindsight, I slid into arrogance based upon past success. We have done very well for a long time by steadily improving our service, without doing much CEO communication. Inside Netflix I say, “Actions speak louder than words,” and we should just keep improving our service.
But now I see that given the huge changes we have been recently making, I should have personally given a full justification to our members of why we are separating DVD and streaming, and charging for both. It wouldn’t have changed the price increase, but it would have been the right thing to do.
Now with communication beforehand, the upcoming changes are no less subtle to altering the service that you loved. As was mentioned previously in some of the blog posts following the price increase, Netflix has separated DVD and streaming plans and the services into two different companies. After 10 years of DVD-by-mail operations, Netflix is spinning off that service into its own company called Qwikster. The Netflix name will be retained for their instant streaming service.
Along with separate companies, there will be separate websites. Netflix.com will be solely for managing your Instant Streaming queue while Qwikster.com will be for managing your DVD queue. Qwikster will be adding video games to their queue to enable renting Wii, PS3, and Xbox 360 games. The downside of the split companies comes in the form of your queue – they will no longer be integrated. If you rate a movie on one, it won’t automatically show up on the other. Similarly, if you need to change information about your account, you’ll have to do it twice.
The separate websites seems like the worst deal for their remaining customers who subscribe to both services. A number of people that I’ve talked to have stuck with Netflix solely for their queue management. In strike two against that notion this weekend (strike one being deleting all unavailable queued movies from your Instant queue without explanation or previous warning), the separate queues will start off the same but will greatly deviate unless a customer of both services is diligent in keeping them accurate. I am very surprised they couldn’t utilize the API system between both websites to keep it synchronized.
Andy Rendich, who has been working on our DVD service for 12 years, and leading it for the last 4 years, will be the CEO of Qwikster. Andy and I made a short welcome video.
Some members will likely feel that we shouldn’t split the businesses, and that we shouldn’t rename our DVD by mail service. Our view is with this split of the businesses, we will be better at streaming, and we will be better at DVD by mail. It is possible we are moving too fast – it is hard to say. But going forward, Qwikster will continue to run the best DVD by mail service ever, throughout the United States. Netflix will offer the best streaming service for TV shows and movies, hopefully on a global basis. The additional streaming content we have coming in the next few months is substantial, and we are always working to improve our service further.
I’m one of those that feel splitting the business is a poor choice. If a customer wants both services now, they have little incentive to give Netflix and Qwikster their business. Instead they might choose Netflix for streaming and Redbox for DVD or Amazon for streaming and Qwikster for DVDs. Their new service of offering video games through Qwikster even has competition from the already well-established Gamefly.
Only time will tell how Reed Hastings recent directions will carry forward. Will he be freeing himself of the DVD service he seems to hate so much or will he just be comparable to Nero playing the fiddle while Rome burns?