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Dear James,
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.
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