Netflix CEO: I messed up

Netflix

Netflix's chief executive officer apologized to subscribers for "arrogance based upon past success" in a remarkably frank mea culpa he posted on the Internet late Sunday while announcing plans to separate the company's DVD and video streaming services.

"I messed up," Reed Hastings, the company's co-founder and CEO wrote in a blog post.."I owe everyone an explanation."

A couple of months ago, Netflix split its streaming and DVD-by-mail services, raising prices by as much as 60 percent. The customer backlash was immediate and Netflix now says that it expects a total of 24 million subscribers in the third quarter, down from the 25 million it forecast in July.

Netflix's stock price has fallen more than 40 percent below where it stood before the company unveiled the higher prices. The cost to shareholders so far: more than $6 billion in paper losses.

"In hindsight, I slid into arrogance based upon past success," wrote Hastings, who went on to criticize the way the pricing change got communicated to subscribers.

"We have done very well for a long time by steadily improving our service, without doing much CEO communication. Inside Netflix I say, "Actions speak louder than words," and we should just keep improving our service," he said.

"But now I see that given the huge changes we have been recently making, I should have personally given a full justification to our members of why we are separating DVD and streaming, and charging for both," he continued. "It wouldn't have changed the price increase, but it would have been the right thing to do."

The DVD-by-mail service will now be called Qwikster. The company said that its streaming service will continue to be offered under the Netflix brand. While customers can still subscribe to both, the sites will no longer be integrated. The websites will have separate billing and ratings systems. Hastings elaborated on the changes in the accompanying YouTube video.

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Funny tweets about Netflix's new service, Qwikster

[Leaderless]

Netlix CEO still doesn't get it......it's the exorbitant fees idiot!!

[Bojax39]

"Netflix CEO: I messed up"

Yeah, and the messing up continues.... HATE Qwikster... sounds like dumpster .... which is where the whole thing seems to be going....

[baileyccc]

I dropped them immediately.

[knownaym]

Yikes...I'm more than likely to cancel my service.. i have 2 Blu ray movies and the streaming..combines both were like $17.99 and now it's like at $25

This video hit it on the head..online content 99% old movies on there and waiting a month before you can even get the newer movies that go to video... I guess ill switch to red box

[worldcityguy]

How nice that the CEO apologizes for a mistake while announcing his plans to make another major mistake, separating the services into separate, incompatible systems. Really? That's the strategy for retaining members? If you own Netflix stock, sell fast!

[mamoreng]

>>50% rate hikes! You want more of my hard earned money for multi-million dollar bonus for your board? Not another cent!!!!

[middlefingur]

Dear Mr. Hastings:

I just got your email, and, as a long-time customer, quite frankly found it to be offensive. And perhaps a devastating mis-calculation for your business.

Your best customers are those like myself that use the DVD AND the streaming services. But those are the very customers that you are alienating. Now you write a letter to us in the form of an "apology"... and yet that apology masks the fact that you are making things significantly worse for us.

Now not only will we have to pay a LOT more for your services, but we will also have to access two separate websites in order to organize our queues.

Other companies make an effort to treat their best customers well, by bundling services and giving discounts.

You have chosen the opposite approach, by un-bundling.

And then you have the temerity to write a self-serving email that says that we (the customers who have to pay an unprecedented price increase) should feel sorry for YOU (because you loved your red Netflix envelopes so much.)

Well, it didn't work. I don't feel sorry for you, and will be looking into other streaming services. For after all, the library of movies available for streaming through Netflix is quite paltry.

You know what consumers like? Large selection, customer service, and reasonable prices. You are now falling down on all counts.

Good luck to you, sir.

[sctpdx]

Fewer viewing options and higher price = destruction of your company and injury to the industry as a whole. Netflix was sneaky also - I never even received notice of price increase other than thru the media. Bad move - but also a failing service. Why would anyone seek the shelter of a sinking ship like Netflix. Soon to be nothing more that Blockbuster - broke.

[Truth_Tracker]

This is NOT "mea culpa" at all. This is "I'm sorry YOU (the Netflix customer) misunderstood." This idiot still doesn't get it and I resent the fraud pretense that he's making some kind of "mea culpa" confession, when he is actually trying to justify the unjustifiable.

These clowns in the extremely greedy, expensive entertainment business need to be more grounded in actual reality, and they need to forsake their determination to "spin" their delusions and call it reality.

In a bitterly desolate economy like we're in now, people look to see what is 'expendable' and what is not, when belt-tightening is absolutely mandatory. And entertainment is pure 'fluff' -- an excessive extravagance that can easily be axed without impairing one's quality of life or living standard one scintilla. And since it's become so outrageously, exorbitantly expensive, cutting that single piece of fluff out of our lives can drastically improve our financial picture and quality of life. A life without this gaudy, pretentious, greedy, empty, useless "entertainment" delusion actually improves one's quality of life -- because then people can 'live' their own lives instead of sitting around on our backsides watching someone else 'pretend' to be living a life.

Properly understood in this way, entertainment should be dirt cheap, because if it isn't, it simply cannot justify its existence in our lives. In reality, it's totally and utterly frivolous, useless and meaningless.

[SoftwareHollis]

Netflix has been the poster child for "worst business practices" lately. A shining example of hubris and corporate narcissism.

I've written about them in terms of "Driving Customers Away vs. Customer-Driven" at http://www.softwaremarketingexperts.com

I've also written an article on Sys-Con Media which will be published later today about "Arrogance as a Business Worst Practice" - featuring Netflix. http://hollistibbetts.sys-con.com