Netflix Shoots Its Other Foot
Those square red Envelopes that have long identified Netflix DVD deliveries will soon be replaced by ones bearing the logo "Qwikster," Netflix CEO Reed Hastings said on Sunday as he posted a public apology about recent moves by the company that have driven away a million subscribers and driven down its Stock. Hastings said that he had decided to split his company in two one, the traditional DVD-by-mail service with its online queues; the other, the streaming service, which will continue to operate under the Netflix banner but feature a totally a revamped website. Analysts speculated that the latest move will simply frustrate Netflix customers further, especially those who wish to continue to receive DVDs in the mail and stream some movies. TheStreet.com quoted Wedbush analyst Michael Pachter as saying, "The goal of a business is to keep things simple for their consumer. ... This creates an extra step for the consumer and is taking out yet another element of convenience." Hastings surprise decision to create two separate and distinct business came in the context of an apology in which he remarked that "many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes." Yet, the latest announcement could trigger even greater dissatisfaction and subscriber flight. Indeed the Netflix blog on which Hastings posted his apology/announcement was swamped with complaints. "I will never go to Qwikster, create a new account and then shop both sites, never," wrote one unhappy Netflix subscriber. Another wrote, "Your arrogance is still so thick it's palpable. the 'I'm sorry if you were offended' is no apology at all. It just makes things worse." Still another commented, "I worked at the Coca-Cola Company when they launched the ill-fated 'New' Coke. We all know where that went. Netflix, you are making a huge mistake." Netflix stock continued to fall. At midday on the Nasdaq it was down 3.17 percent to $152.02.