Humbled Netflix Separates DVD and Streaming Businesses, Abandons Price Changes

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TORONTO -- Netflix CEO Reed Hastings has offered a rare mea culpa: “I messed up. I owe everyone an explanation.”

A humbled Netflix co-founder, facing a consumer backlash over his decision to separate his DVD and streaming businesses and raise prices, has renamed his disc-by-mail business Qwikster.

But while continuing to call the streaming business Netflix, Hastings on his company’s blog site apologized for any slight to his subscribers, who have dwindled in number of late.

“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,” he wrote.

“That was certainly not our intent, and I offer my sincere apology. I’ll try to explain how this happened,” Hastings added.

The Netflix boss insisted the company was evolving with the times. He just got that messaging thing wrong.

“In hindsight, I slid into arrogance based upon past success. We have done very well for a long time by steadily improving our service, without doing much CEO communication,” Hastings wrote.

To repair the damage to his company’s credibility, Hastings said Netflix will do more to market its DVD service, and improve its streaming technologies and offerings.

“So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently,” he continued, explaining the decision to separate the two businesses.

And the Qwikster business will add video games.

Oh, and a repentant Hastings is done with price changes.

“Members who subscribe to both services will have two entries on their credit card statements, one for Qwikster and one for Netflix. The total will be the same as the current charges,” he said.

 

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