[ChaneRZ]

Dear ChaneRZ,

I messed up. I owe you an explanation.

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. Let me explain what we are doing.

For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us). So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.

So here is what we are doing and why.

Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD. DVD is a great option for those who want the huge and comprehensive selection of movies.

I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We need to focus on rapid improvement as streaming technology and the market evolves, without maintaining compatibility with our DVD by mail service.

So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.

It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

There are no pricing changes (we’re done with that!). If you subscribe to both services you will have two entries on your credit card statement, one for Qwikster and one for Netflix. The total will be the same as your current charges. We will let you know in a few weeks when the Qwikster.com website is up and ready.

For me the Netflix red envelope has always been a source of joy. The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you.

I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly.

Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.

Respectfully yours,

-Reed Hastings, Co-Founder and CEO, Netflix

p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments.

[persian54]

OK?

I'm sure most people on here also got this email lol

[BMW//M]

Hmm, if they offer video games their stock should rise greatly and gamefly will face a major competitor.

[Maestro]

I did not get that email yet, interesting, well with the way they handle this whole thing and the fact they removed about 60% of their content from streaming Netflix is not a deal anymore. I am about to cancel mine and with their recent earnings warning and stock tanking I am not the only one feeling they screwed up. They are trying to play the Wall Street game by separating the company like this. It looks like the streaming part maybe dead at this point.

I know this was not all Netflix doing, I know the content owners renegotiated the pricing on streaming and DVD and screw Netflix in the process. Content owners do not like this one price all you can eat model.

I hope in the end the content owner make less as more and more people drop netflix in protest.

[Freakazoid]

Originally Posted by BMW//M

Hmm, if they offer video games their stock should rise greatly and gamefly will face a major competitor.

I've been waiting for this for ages. took netflix fucking long enough.

I was a big advocate of blockbuster when they had the 'all you can rent' of anything all month. If Netflix does the same thing, I'll cancel my gamefly in a heartbeat and jump on the netflix bandwagon.

I'm honestly not impressed with gamefly and will jump at the first good chance.

[Freakazoid]

Originally Posted by Maestro

I did not get that email yet, interesting, well with the way they handle this whole thing and the fact they removed about 60% of their content from streaming Netflix is not a deal anymore. I am about to cancel mine and with their recent earnings warning and stock tanking I am not the only one feeling they screwed up. They are trying to play the Wall Street game by separating the company like this. It looks like the streaming part maybe dead at this point.

I know this was not all Netflix doing, I know the content owners renegotiated the pricing on streaming and DVD and screw Netflix in the process. Content owners do not like this one price all you can eat model.

I hope in the end the content owner make less as more an more people drop netflix in protest.

while I agree with you in the short term. The long term, I feel, is a perfect strategy and poises netflix to be in an awesome spot.

Will streaming likely die? Hell yes. I think it's going to be too expensive to maintain of its own accord. We'll see with that. But splitting these two 'ideologies' is the way to do it, and the way it should have been done earlier (IMO). Mixing these was a guaranteed recipe for disaster.

Combining this with video games, etc is even MORE awesome. This will deal a hell of a blow to gamefly, redbox, etc.

Will they immediately suffer? Fuck yes. Will they recover and be stronger, and better poised for growth? imo hell yes

[Grail05]

fawk that i cancelled mine... too long to read.. PRICE UP... cancelled. done...

[darkcloud]

I'm gonna give them a month or two into the transition just to see. I'm crossing my fingers for better online content but that likely won't happen and I'll be canceling the online aspect. Although I'm pumped for the game aspect of the rental service. Soo many games I want to play but the wifey doesn't allow me to buy that many haha

[Freakazoid]

Originally Posted by darkcloud

Soo many games I want to play but the wifey doesn't allow me to buy that many haha

exactly, allows you to combine all in one. rent a movie to make the wife happy, rent a game to make you happy

[OOO]

Netflix is digging its own grave.

[BayMoWe335]

Sounds like kind of a desperate move to fix a huge blunder. Jesus, their stock got hammered as a result too. Market isn't kind.

[BMW//M]

Netflix will sink to the lower 100s. If they lower their sub. rates they'll be fine but they won't.

[Nutballa]

I've has streaming for the longest. Will not cancel.

[persian54]

why do you guys say streaming will die? They're trying to focus all their efforts on streaming

[ChaneRZ]

They need to update the streaming lists.

[darkcloud]

Originally Posted by ChaneRZ

They need to update the streaming lists.

Agreed. The way they see it is by separating the 2 services the streaming side will have more assets to get better content. We'll see. Not concerned about the DVD/bluray/game side. I'll keep that service as I enjoy it and def get my $12 worth. I'm curious to see how much it will coat to add games. Bluray upgrade is only $1 so if it's the same then that's a awesome deal. $5 or more a month then I dunno.

Although if they allow you to add and drop the service whenever you want on a monthly basis then sweet! Have it for the fall-spring and drop it for the summer or based on when good games are out.

[Maestro]

Originally Posted by Freakazoid

while I agree with you in the short term. The long term, I feel, is a perfect strategy and poises netflix to be in an awesome spot.

Will streaming likely die? Hell yes. I think it's going to be too expensive to maintain of its own accord. We'll see with that. But splitting these two 'ideologies' is the way to do it, and the way it should have been done earlier (IMO). Mixing these was a guaranteed recipe for disaster.

Combining this with video games, etc is even MORE awesome. This will deal a hell of a blow to gamefly, redbox, etc.

Will they immediately suffer? Fuck yes. Will they recover and be stronger, and better poised for growth? imo hell yes

As much as I would like to believe this might turn out better, I do not see it happening. I happen to work it the video delivery industry and I can tell you content owners are doing everything in their power to limit your access to content unless you willing to pay each and every time.

Ask yourself why you can not by the standalone DVR which allows you to record any show you like on any channel you like. Because content owners have sucessfully blocked this ability. It should be easy to put a DVR unit between the HDMI cable between you STB and TV and record or better yet have it on the cable coming into you home. but you can't it is all encrypted. Also, most DVR today do not have large HDD in them, why again it forces you to delete content and not create your own video library like the yesterday of VHS.

Content owners do not like all you can consume at one price model, consumers like it obviously, but they are not in control anymore. Since Netflix was growing fast and seeing lots of success, I believe the content owners decided to put the breaks on them thus the reason we pay more now and have less flexibility.

[Freakazoid]

Originally Posted by persian54

why do you guys say streaming will die? They're trying to focus all their efforts on streaming

refer to Maestro's point above.

content owners are trying to get every dollar they can. It's the entire reason why netflix had to do this in the first place. I don't see it getting much better, unfortunately.


I still find it amusing, personally, that this greed is what pushes people away from legally renting/purchasing products instead of pirating them.

[darkcloud]

Originally Posted by Maestro

As much as I would like to believe this might turn out better, I do not see it happening. I happen to work it the video delivery industry and I can tell you content owners are doing everything in their power to limit your access to content unless you willing to pay each and every time.

Ask yourself why you can not by the standalone DVR which allows you to record any show you like on any channel you like. Because content owners have sucessfully blocked this ability. It should be easy to put a DVR unit between the HDMI cable between you STB and TV and record or better yet have it on the cable coming into you home. but you can't it is all encrypted. Also, most DVR today do not have large HDD in them, why again it forces you to delete content and not create your own video library like the yesterday of VHS.

Content owners does not like all you can consume at one price model, consumers like it obviously, but they are not in control anymore. Since Netflix was growing fast and seeing lots of success, I believe the content owners decided to put the breaks on them thus the reason we pay more now and have less flexibility.

Have you not noticed you don't get all you want with Netflix streaming? They only allow you to watch a movie so many times before it's removed for the online site. Try it. I've watched a favorite movie. Then a few weeks later I was bored and nothing was on tv and I figured I'd just watch that again as I did other stuff. The movie was no longer available.

They have that controlled to some degree. The problem is with the whole music/movie industry. I know they have to make their money. Problem is they are far too past controlling this. If anything rental fees need to drop dramatically with a time frame to watch similar to iTunes but cheaper. Nlone will pay 3.99 to watch some old movie. Maybe .75 for 5+ years or older and $1.50 for 1-5 years and $2-2.50 for new titles. Just to stream the movie.

At $4+ a title they deter you from watching a movie more than once. At a slightly cheaper price people may watch a movie more often. All I'm saying is they need to figure a better pricing scale out or a better rental system. Maybe allow you 30 days and 2-3 viewings at $5 a pop. Not just a 1 and do e system. Obviously iTunes made it work for music.

[Maestro]

Okay this belongs in this thread

[Freakazoid]

Originally Posted by Maestro

Okay this belongs in this thread

I saw the full comic a little while ago. Kinda stupid metaphor imo, but I see their point

[Maestro]

Originally Posted by darkcloud

Have you not noticed you don't get all you want with Netflix streaming? They only allow you to watch a movie so many times before it's removed for the online site. Try it. I've watched a favorite movie. Then a few weeks later I was bored and nothing was on tv and I figured I'd just watch that again as I did other stuff. The movie was no longer available.

They have that controlled to some degree. The problem is with the whole music/movie industry. I know they have to make their money. Problem is they are far too past controlling this. If anything rental fees need to drop dramatically with a time frame to watch similar to iTunes but cheaper. Nlone will pay 3.99 to watch some old movie. Maybe .75 for 5+ years or older and $1.50 for 1-5 years and $2-2.50 for new titles. Just to stream the movie.

At $4+ a title they deter you from watching a movie more than once. At a slightly cheaper price people may watch a movie more often. All I'm saying is they need to figure a better pricing scale out or a better rental system. Maybe allow you 30 days and 2-3 viewings at $5 a pop. Not just a 1 and do e system. Obviously iTunes made it work for music.

Actually, recently Netflix took down by my own estimated about 60% of their content off streaming. so it not that you watched it too much because I can tell you my daughter and her friends streams a number of movies and shows over and over again, can not tell you how many times they watched, it was enough for them to know the lines in the movies.

The primary reason we got Netflix is because of the kids, they are the biggest user of it. I got tire of them wanting to go get movies at blockbuster and paying the 1.99 to 4.99 price depending on the movie and it was adding up. At any given times my kids have about 60 to 80 movies in the streaming que. Come Sept 1 when the new fees came into existence that que dropped to 25 movies. All the others were in a new que on the website and they all said these are no longer available for streaming it was DVD only. Most of these movies in que we haven't even watched yet.

Again the content owners mush has pulled the streaming licenses from Netflix in their recent negotiations.

The Content industry see the internet as bad for their business, the music industry blames pirating and itune for destroying their industry. When in reality it was dying anyway and they could not see it. Today Itune allows people to buy exactly what they like and want at a reasonable cost. The Music industry still wants you to buy a entire CD of content at $12 to $20 even though 3/4 of the content sucks. But people are less willing to put out $20 when they can pay $0.99 for the one song they like. The Music industry does not even want to admit their sales have increased in the last 3 yrs because of itunes and people are actually buying verse pirating.

In the Movie industry, they do not want you to own or have unlimited access to digital version of their content. If they have their way you will pay every time you watch, and paying could be in the way of ads hitting you in the face or you pay them a fee.