With over 26 million users in the U.S. alone, it’s safe to say that a few of you out there are Netflix subscribers like I am. If this is the case, then many of you probably received an email from Co-Founder and CEO Reed Hastings yesterday apologizing for his recent behavior and putting a few paragraphs of explanation behind his latest price hikes. The email I received is below.
For those who aren’t aware, several months ago, Netflix announced that it would be splitting up its DVD by mail and its streaming video services, and charging a monthly fee for each one, rather than offering a discounted price for combining the two. Massive uproar struck as many people who were subscribers of both DVD by mail and streaming video would be charged up to a 60% increase to keep both features.
In the email, Hastings goes over what he did wrong in announcing the price split between the two services, and takes a very personal tone from the beginning with “I messed up. I owe you an explanation.” His apology came well after the press about the initial price hikes had subsided. But, as they say, it’s never too late for good PR. Hastings explained in detail the reason for the change being that the two services were growing at different rates, and to allow them to do so, they needed some sort of separation. In my mind, this made total sense, and his comparisons to AOL dialup and Borders bookstores sold his point of the importance of staying fluid and letting your success from one product carry you to the next. This was shaping up to be a very concise and apologetic email when the conversation shifted gears.
Hastings explained that the name Netflix will remain in use as the title of the streaming video service, but the DVD by mail will assume the moniker of Qwikster. Service features will remain the same, with obvious additions like qwikster.com to access DVD queues and less expected additions like the free option to include video games in your DVD by mail rental service. The last thing I was expecting in an apology email is a product change, even if it was just a name.
All in all, it seems Reed and the crew have stepped up their game, noting their obvious mistakes in the delivery of their news a few months ago. This much more personal approach not only begged forgiveness for their previous actions, but took the necessary step in notifying everyone personally of the newest change in their line-up. I’ll admit that my current Netflix subscription included only streaming video, so the price change did not affect me. This probably makes me a bit more forgiving than if I had been asked to suddenly pay $16 instead of $8 for both mail and streaming services. Regardless, this new leaf of transparency that Hastings has turned over is worth mentioning. While it certainly doesn’t replace the 1 million lost subscribers, if Netflix and partner Qwikster can keep up the attitude that the company is held accountable by the customer, and the customers are held accountable by their wallets, then I am looking forward to what both companies have to offer down the road.