After a summer of turmoil for Netflix, Reed Hastings (above), CEO of Netflix, issued a public apology today for the way its users have been treated in recent months. Subscribers have been incensed by a severe price hike that separated Netflix’s DVD rental and streaming services, and they were further disheartened when Starz pulled out of renewing its movie streaming partnership. There was an outcry over what seemed like a lack of caring from Netflix about the users, as the price hikes were reported online before any users were contacted either through their account or via email. Today, Hastings attempted to change that.
Hastings opened his lengthy letter to the Netflix community today by writing, “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.” He continued by noting how his greatest fear was that Netflix wouldn’t be able to adapt to the streaming service that users demand, and that they’d become a casualty of progressing technology. He name-checked two struggling, defunct franchises in saying, “Most companies that are great at something – like AOL dial-up or Borders bookstores – do not become great at new things people want (streaming for us).”
He moved on to unveil Qwikster, the renamed DVD service Netflix will provide. It will still function in the same way Netflix delivery did, but with a new name to further separate the two revenue streams. He also announced that Qwikster will add an extra feature for a fee that will let users take out video games for the XBox 360, Playstation and Wii, much in the same way that Gamefly works. This and Qwikster’s already in-place Blu-ray service will be the two add-ons available to customers.
While the Qwikster name seems tacky (albeit a great Words with Friends word), Hastings seems to have good intentions with this move. He attempted to soothe the worries of customers with the letter, which read more like a personal apology than a corporate re-branding. By keeping the Netflix brand name on the streaming service instead of the DVD rentals, it’s clear that Netflix is making streaming their priority going forward. Hastings mentioned that having two names gives them a marketing opportunity to promote Qwikster, but streaming is obviously the more forward-moving technology.
Unlike many companies, people seem to have a personal relationship with Netflix. Getting a Netflix envelope in the mail is a comfort to people that work hard and are looking to unwind. The same goes with the streaming service, the improvement of which means better selection and experience, in a purely pleasurable way. Users want the company to be at its best, and that’s why it hurts when it makes mistakes like it did this past summer. This apology will help mend fences, but the business-to-client relationship wasn’t what was wounded. It was more personal than that.