Netflix Separates DVD Business From Web Streaming
DVD service will take the name 'Qwikster'
09/19/2011 | By Mark Huffman
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ConsumerAffairs.com
| Entertainment
Two months ago, when Netflix announced what appeared to be a big price hike for its DVD and web streaming content, it got a lot of grief from consumers. But it appears the move was part of a larger business plan.
Netflix Inc. is splitting off its DVD-by-mail service from the streaming business. Both will be stand-alone businesses that company officials say will have a better chance to flourish on their own.
Netflix co-founder and CEO Reed Hastings announced the changes in a blog posting Sunday, admitting that the new price structure could have been handled better.
Negative feedback
“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,” Hastings said. “That was certainly not our intent, and I offer my sincere apology.”
He can say that again. A ConsumerAffairs.com analysis of about 4 million consumer comments over the past year finds that Netflix has gone from an overall approval rating of 60% to about 25% in September.
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| Blue line shows net sentiment |
Hastings evoked AOL, as being great at Internet dial-up service, and Borders as being great at operating book stores, as examples he did not want Netflix to emulate. He said these companies did not become great at offering new things people want for fear of hurting their core business.
So Netflix is separating its DVD-by-mail business, which will operate under the name Qwikster, and offer video games along with movies and TV shows on DVD. The online streaming content business will retain the name Netflix.
There are no other price adjustments, Hastings said. Both Netflix and Qwikster will carry $7.99 per month subscription fees.
But is this the answer? Net sentiment during September has been erratic, taking a steep dive into negative territory just before Hastings' announcement and is hovering around an anemic 5% mark today.
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| Blue line shows net sentiment in September |
Consumer comments monitored on Facebook, Twitter and other social sites and blogs found that most negative comments were focused on the changes in the Netflix pricing and packaging, rather than on the usual assortment of gripes -- delivery problems, streaming issues and movie selection.
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| Blue line shows net sentiment in September |
Mea culpa
In his mea culpa, Hastings said he “slid into arrogance” when he failed to communicate to members why the company appeared to be doubling its price back in July.
“I should have personally given a full justification to our members of why we are separating DVD and streaming, and charging for both,” Hastings said. “It wouldn’t have changed the price increase, but it would have been the right thing to do.”
Netflix and Qwickster will have separate websites and consumers who subscribe to both services will have two entries on their credit card bills.
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Sentiment analysis powered by NetBase
Michelle Lanzisera (Mon, 19 Sep 2011 15:43:39 +0000): Hello...it's all about communication with "any" relationship! You don't need a fancy degree or job title to know this, a 5 yr old to can tell you that. Gotta love Corporate America, they really think the rest of us are completely stupid!
Earlene Car Sto Montero (Mon, 19 Sep 2011 16:36:57 +0000): I ordered netflix..then I started getting these calls..from pakistani people telling me that they would give me 500.00 dollars if I would give them my bank account number to deposit the money..I told them why would you want to give me this money? they said for using my card..I told them no..they acted all schocked..what you don't want 500.00. dollars in your account I told them no that they were trying to scam me..they hung up..called again and again, and again..I reported them to the better bussiness buraeu..the attprney general, the district attorney..I called netflix and told them what was going on I told them someone was stealing the card numbers...I cancelled..I got another call.I told them that the fbi was tapping my phone..that they knew they were scamming people...they hung up..then I found out that they were now applying for credit..so I had to write a letter to the people who give you your so called credit scores to dispute the application..put a freeze on my card...so this garbage could stop I also had to call the bank to take care of things with anything thes pakistanis might try...this all would have been prevented if I just NEVER would have ordered netflix..
Cara Kean (Mon, 19 Sep 2011 16:37:26 +0000): I'm confued! I pay 9.95 not 7.95 for netflix. What gives?
Romaine Williams (Mon, 19 Sep 2011 22:09:48 +0000): Well all of the shareholders of Netflix, enjoyed great profits, after they went up on the prices, 60%, now the CEO want to apologize to the consumers, this should have been explained to the subscribers before they decided to change the prices, it is all about greed.
David R. Sutherland (Tue, 20 Sep 2011 02:17:45 +0000): I'm a Netflix subscriber and I wasn't particularly upset with the changes. As far as I can tell, for me, this would translate into Streaming and two DVD's, instead of three, out at one time. I could live with that, after all it's MOVIES not FOOD? What is beginning to annoy me is I've been reading about this since the beginning everywhere but where it counts, have not heard anything at all directly from Netflix nor seen anything on their site? As I understand it (from everyone BUT Netflix) this is all to come to fruitition in September? If so, it's September nineteenth, the end (of the month) is near and as far as I'm concerned this is all a rumor until I hear directly from Netflix. How they handle that notification (not looking good thus far) will determine my feelings toward them as a company and my status as a customer.