Recently, those of us who subscribe to Netflix – a video rental (and previously video streaming) service – received a letter:
“I messed up. I owe you an explanation.
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. That was certainly not
our intent, and I offer my sincere apology. Let me explain what we are doing.
For the past five years, my greatest fear at Netflix has
been that we wouldn’t make the leap from success in DVDs to success in
streaming. Most companies that are great at something – like AOL dialup or
Borders bookstores – do not become great at new things people want (streaming
for us). So we moved quickly into streaming, but I should have personally given
you a full explanation of why we are splitting the services and thereby
increasing prices. It wouldn’t have changed the price increase, but it would
have been the right thing to do.
So here is what we are doing and why.
Many members love our DVD service, as I do, because nearly
every movie ever made is published on DVD. DVD is a great option for those who
want the huge and comprehensive selection of movies.
I also love our streaming service because it is integrated
into my TV, and I can watch anytime I want. The benefits of our streaming
service are really quite different from the benefits of DVD by mail. We need to
focus on rapid improvement as streaming technology and the market evolves,
without maintaining compatibility with our DVD by mail service.
So we realized that streaming and DVD by mail are really
becoming two different businesses, with very different cost structures, that
need to be marketed differently, and we need to let each grow and operate
independently.
It’s hard to write this after over 10 years of mailing DVDs
with pride, but we think it is necessary: In a few weeks, we will rename our
DVD by mail service to ‘Qwikster’. We chose the name Qwikster because it refers
to quick delivery. We will keep the name ‘Netflix’ for streaming.
Qwikster will be the same website and DVD service that everyone
is used to. It is just a new name, and DVD members will go to qwikster.com to
access their DVD queues and choose movies. One improvement we will make at
launch is to add a video games upgrade option, similar to our upgrade option
for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members
have been asking for video games for many years, but now that DVD by mail has
its own team, we are finally getting it done. Other improvements will follow. A
negative of the renaming and separation is that the Qwikster.com and
Netflix.com websites will not be integrated.
There are no pricing changes (we’re done with that!). If you
subscribe to both services you will have two entries on your credit card
statement, one for Qwikster and one for Netflix. The total will be the same as
your current charges. We will let you know in a few weeks when the Qwikster.com
website is up and ready.
For me the Netflix red envelope has always been a source of
joy. The new envelope is still that lovely red, but now it will have a Qwikster
logo. I know that logo will grow on me over time, but still, it is hard. I
imagine it will be similar for many of you.
I want to acknowledge and thank you for sticking with us,
and to apologize again to those members, both current and former, who felt we
treated them thoughtlessly.
Both the Qwikster and Netflix teams will work hard to regain
your trust. We know it will not be overnight. Actions speak louder than words.
But words help people to understand actions.
Respectfully yours,
Reed Hastings
Co-Founder and CEO
Netflix
p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments.
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We can all take something away from Netflix’s mistake and follow-up “mea culpa”. No one is infallible; when a company makes a mistake, from a one man shop to a small business to a large corporation, it’s all about reacting quickly, owning up to the error, apologizing, and making it right. Not acknowledging the problem exists – or even worse, denying it – only makes things worse. Arthur Andersen and Enron, anyone?
Like Netflix, Teltek has been proactive in responding to customer feedback. We strive to provide the outstanding service our clients deserve, and look for ways to improve not only our day to day practices but also the technology and products we offer.
Comment or shoot us an email with suggestions or kudos!