Some might call it pouring salt into a wound. Netflix CEO Reed Hastings apologized for how he handled the price increases on the company's service, but his words seem to be akin to picking a scab.
Hastings started out his apology with candor, admitting he "messed up" and owes everyone an explanation about why Netflix was separating its DVD and streaming services, and the price changes that go along with that move. He then went into a long explanation that started back with AOL dial-up and Borders bookstores and noted how these companies made mistakes by moving too slow.
Hasting's error, as he sees it, is not communicating well enough during the company's rapid evolution. Now, he's trying to do what he believes he should have done from the get-go: communicate. But customers don't seem to be buying the spiel.
Foot in Mouth
"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," Hastings said. "We feel we need to focus on rapid improvement as streaming technology and the market evolve, without having to maintain compatibility with our DVD by mail service."
Hastings went on to say the DVD by mail service was getting re-branded as Qwikster. DVD members will now have to go to qwikster.com to order discs -- and now, the addition of video games -- by mail. The name was chosen because it refers to quick delivery. Netflix will be reserved for the streaming service.
That complicates things for Netflix subscribers, who now have to subscribe to two separate services that are no longer integrated. If you subscribe to both services, and if you need to change your credit card or e-mail address, you have to do it in two places. Similarly, if you rate or review a movie on Qwikster, it doesn't show up on Netflix, and vice versa.
Angry Movie Fans
For this, Netflix is charging consumers more than before. Qwikster unlimited DVD-only plans in the U.S. are $7.99 a month for the one-DVD-out-at-a-time plan and $11.99 for two DVDs at a time. The unlimited-streaming plan will remain at $7.99 a month. The price for getting both unlimited streaming and unlimited DVDs will be $15.98 a month.
"You're diluting your brand with 'Qwikster,' you've financially drilled and disrespected your customer base with the cost increases, and now you are making it harder for them to manage their queues and basically charging them for it," Ross Brandt commented. "My personal solution was simple: delete DVDs."