Netflix CEO Hastings apologizes to subscribers in lengthy blog post for pricing changes.
Netflix burned itself pretty bad with the announcement of the new pricing structure that made the streaming movie service not an add-on to the DVD rental anymore. Tons of Netflix subscribers complained about and event left in droves. Netflix lost about 600,000 subscribers from June to July. The stock market took notice and sent NFLX down about 50% (last: $155.05) from its 52-weeks high of over $300. All this was now enough for Reed Hasting, Netflix's CEO, to address the Netflix subscribers in a lengthy blog post. He starts off with an apology for the miss communication around the new pricing structure that made streaming as expensive as the DVD by mail service. Many customers had both. The reason is simple. The streaming service is just not as complete as the DVD by mail service.
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Netflix is not taking the change back and instead moves aggressively forward to now completely separate DVD by mail and streaming. The DVD by Mail service will be renamed to Qwikster (no, today is not April 1). The movie streaming service will continue to be called Netflix. Hastings explains that Netflix needs to evolve and his biggest fear is not to make the jump into the next level of evolution.
Netflix sees its future in streaming. Hastings is right about that. The only problem is other streaming services exist already today as well. When Netflix launched DVD by Mail, nobody was doing it. I still remember it how awesome it was not to have to run out to Blockbuster store and spend an hour to find anything watchable on a Saturday night.
Netflix has still tons of subscribers, but they need to move fast to keep them happy. In my eyes the biggest issue is that Netflix needs to make the movie streaming catalog as comprehensive as the DVD by Mail service as soon as possible. This is difficult, because of the licensing nightmare with Hollywood. All streaming services have this issue. The one who solves it first will win.
You can also watch Reed Hasting explaining himself below in this video.