Netflix to split streaming and DVD services
Netflix CEO Reed Hastings made a post on the official Netflix blog last night to announce the service will be splitting their DVD and streaming video services into two separate companies. The separation of the DVD service, to be re-named Qwikster, apparently was the impetus for the recent price split. Because Netflix was not forthcoming about those plans, Hastings took the opportunity to eat some crow in his blog post, starting off simply with "I messed up. I owe everyone 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. I’ll try to explain how this happened." ~ Reed Hastings, Netflix CEO
Hastings later says he "slid into arrogance based on past success" while continuing to explain and apologize for the lack of communication with their customers. He then goes on to explain that the streaming and DVD services have become completely different and their separation is necessary to make them both grow and flourish. The name Qwikster was chosen as a reference to quick delivery. The service will remain the same with the addition of Xbox 360, PS3 and Wii games as an upgrade option.
Netflix is a strong brand name and its hard to understand why they would want to remove that name from the DVD side of the business. They can label it Qwikster but people are still going to call it Netflix. And now if you want to have the streaming and DVD services you have to have two accounts, two billing statements and two logins? They're basically making it easier for everyone to take their DVD business somewhere else, and they're probably just planning to sell Qwikster once the dust settles.
It's nice to see a CEO step up and take it on the chin. It should have been through an official press release though, instead of just a blog post. Perhaps that's still coming but I get the feeling that we still haven't heard to whole story on this.
Update: The text of Reed Hastings' blog post was sent out as an email to Netflix subscribers after my initial post.