
What Netflix Could Have Said This Week - barredo
http://www.appleoutsider.com/2011/09/20/netflixpr/
======
ctdonath
Unified queue.

Regardless of media, business structure, delivery mechanism, company name,
etc. methinks what all customers want is a single place to choose & queue
content, filtered by whatever options they desire, delivered on whatever
medium is available and they pay for via a spectrum of contracts (from
unlimited-per-month to single order).

Just make sure it's all on one queue. If multi-queue, then only because one
customer may be grouping for multiple individuals (ex.: husband wants
ultraviolent scifi, wife wants sappy romances, kids want Elmo galore).
Whatever you do, don't force the customer to spend time/effort along such
artificial differences as media (ex.: I want the DVD of "Scarface", but it's
not on streaming anymore and I don't want to pay extra for the BD version -
let me pick those options based on my single content choice, don't make me
search 2-3 different sites for the same title which, I notice, have unreliable
availability).

Amazon faces the same issue: vast business differences between warehouses of
books & other physical stuff shipped by mail, vs. server farms for Kindle,
streaming video, cloud storage/processing, etc. - same problem as Netflix, yet
they're doing well under one website. I can search for Moby's latest album,
and when ready to order can with ease choose between CD, MP3, DVD, and instant
video: same content pool, same checkout, easy delivery, user doesn't care how
it all happened.

~~~
pyoung
My best guess as to why they are splitting the queues is due to the
availability issues on the streaming side affecting customer 'morale', so to
speak. i.e. when a streaming-only customer searches for a title, and then
finds that it is only available on DVD, their perception of the service is
diminished.

I think the end goal of this move is to kill off or sell the DVD portion of
the service entirely, so by splitting the services, investors won't freak out
when that eventually happens. This also is another reason for splitting the
queues.

~~~
ctdonath
That is the main reason why I want a unified queue: inconsistent availability.
I put "Scarface" on my queue, but being a low priority it's pretty far down; I
was content that someday it would reach the top of the DVD queue and show up,
or that on a whim I could hit "Play Now" and stream it. One day I noticed it
was tagged for removal from streaming a few days hence, and didn't have time
to watch it in the meantime. Streaming option disappeared. [shrug] Well, it's
still available by DVD, I'll get to it. Then I get the "we're going to split
the service" notice, note that I only watch 2-3 discs a month (lots of
streaming instead) so the separate fee wasn't worth it and I canceled. Even if
I want to pay a one-time rental to watch it, not available as an option and
alternatives (sign up, get disc, cancel) are too much hassle now.

Huh, maybe I'll check Amazon, where I can buy "Scarface" new, buy it used, no-
strings streaming rental, or maybe even Prime "free" streaming...and all from
a single search...[clickety clickety]...ah, it's $3 to stream it once, and
there's 53 purchasing/renting options from $0.01+shipping used VHS to $3
streaming rental to $700 including humidor. Pity it's not in the "free Prime
streaming" option, but at least I know the options with one search.

~~~
maaku
That post was impossible to read.

Netflix, thanks for doing this to your customers.

------
brown9-2
It's not just the tone of the email or the new name that bugs people - it's
the complete separation of their sites, pretending that the DVD-by-mail site
can't communicate with the streaming-only site, etc.

People are annoyed that their ratings/suggestions won't carry over to the new
site, and that the streaming-site won't let them add a movie to their DVD-by-
mail queue when they search for a title and find it's not available on
streaming (or vice versa, the DVD-by-mail site won't tell them when they could
be watching a title via streaming).

You have to fix that to fix the customer response.

~~~
Tloewald
Agreed. In the end this is all about Netflix and not about its customers. If
any of this had anything positive to offer customers it could have been spun
better, but it doesn't.

I think netflix is actually in deep trouble. It's lost Starz, and could be
losing other valuable rights, it's changing its business model in a way tha
damages its own stickiness, and it raised its prices in a recession for
reasons that make no sense to customers.

~~~
ShawnJG
Not to mention that a lot of there growth was due to the fact that they had a
fiercely loyal cust base that proselytized endlessly for them.

I remember getting an email from them years ago that said in essence, "We've
upgraded our systems and are now more efficient. because of this your plan
will be reduced by xyz." Better service and cheaper, i thought they had me for
life...until recently.

~~~
nooneelse
> Not to mention that a lot of there growth was due to the fact that they had
> a fiercely loyal cust base that proselytized endlessly for them.

Yeah, that was me a week ago. Now, I just dread explaining to my other half
that we will need to manage two movie queues.

~~~
qjz
We have four queues, DVD + streaming (for a family of four). We may ditch DVDs
altogether, and switch to 2 separate streaming-only accounts. Maybe this is
what Netflix is hoping will happen.

------
rumblestrut
Reed Hastings makes me wonder what kind of company Netflix is.

Does Netflix listen to its customers? I've hated the website redesign since it
launched and from what I've read, I'm certainly not alone. I find the redesign
to be much less user friendly than the old one, which I loved. I don't login
as much as before to browse, review and add to my queue. I avoid the website
and stick to watching stuff on my Roku. In my opinion, the redesign took the
Netflix website from one that was fun to use, to one that devalued the company
to being just another company that provides movies. The charm is gone.

And now this odd, Qwikstupid thing. That site isn't even up yet. Is it because
they planned it that way, or are they looking for customer feedback first
before making any concrete changes?

And that takes me back to my original point: does Netflix care about customer
feedback?

(edited for my terrible typos)

~~~
AdamTReineke
Netflix does listen to user feedback. Back in 08, the profiles feature almost
got the ax before vocal user feedback convinced them to keep it. I'm sure
they're listening, regardless of what the final outcome is.

June 19, 2008 - Removing Profiles - [http://blog.netflix.com/2008/06/profiles-
feature-going-away....](http://blog.netflix.com/2008/06/profiles-feature-
going-away.html)

June 30, 2008 - Nevermind - [http://blog.netflix.com/2008/06/profiles-feature-
not-going-a...](http://blog.netflix.com/2008/06/profiles-feature-not-going-
away.html)

(Work has any URL with "netflix.com" blocked, so I'm guessing these are right
blog posts.)

~~~
Klinky
I don't consider pissing off a large portion of your customer base causing a
backlash so strong that you backtrack to be "listening to customer feedback".
It's more like "poking the hornets nest & getting stung". Netflix has a
history of shooting first & asking questions later.

As far as giving feedback or suggestions voluntarily as a customer, good luck.
You can't do it on the website & any suggestion you give to a customer service
rep stays with the customer service rep & goes no further. It's a sad state of
affairs when the best 1-on-1 communication with customers Netflix has had as a
company is their CEO doing damage control in Facebook comment threads.

------
lukifer
It's downright embarrassing how badly Netflix has botched this transition. Not
only was Netflix sitting on 25 million happy subscribers, but subscribers who
were notoriously brand-loyal, and whose word-of-mouth promotion effectively
acted as an unpaid sales and marketing force. Now they seem to be doing
everything they can to alienate their most dedicated users, essentially saying
"We don't want your business anymore".

As a Netflix user for 5+ years, I for one can't wait until a viable competitor
with equivalent selection emerges.

~~~
maratd
It wasn't botched. Everything is by design. Qwikster or whatever they are
calling, is a direct competitor to Netflix, in the same way that Blockbuster
was a direct competitor to Netflix. It's the last generation tech. They want
to kill it.

They want to kill it fast because streaming customers are more profitable.
They want you to switch from physical media to streaming NOW.

Yes, yes, I know you can't get that esoteric or new release by streaming.
There's a ton of stuff that never made it to DVD that is still on VHS or Beta.
I don't see you crying over that.

Netflix knows this. They are accelerating the switch and they're doing that by
killing their DVD division in the most horrid way possible. That game rental
thing is a bone meant to mislead you and is absolutely pointless. That part of
the rental industry is being killed off by Steam. They know that too.

~~~
BlazingFrog
I'm curious, do you have numbers backing the higher profitability of their
streaming business over DVD-by-mail?

I do agree that, if they wanted to get rid of their original line of business
without looking like that's what they were doing, this would be the best way.

~~~
maratd
> I'm curious, do you have numbers backing the higher profitability of their
> streaming business over DVD-by-mail?

Simple reasoning will get you to that conclusion. There are no physical plants
to maintain. No physical inventory to maintain. No postage costs.

You do have the costs of bandwidth, computing power, and licensing fees. I
would imagine those are less than the above.

On top of that, they wouldn't be throwing everything into streaming unless
they were making more money there. Even the most retarded of businesses will
focus on a more profitable line than a less profitable one.

~~~
gentle
Yeah, you mention it, but I think you're vastly underestimating licensing
costs. Hollywood / content producers have them over a barrel, especially now
that they're spinning off the DVD business.

On top of that, those servers don't run themselves and those infrastructure
costs you so quickly dismiss are significant.

~~~
sethg
This. When you own a DVD, you can rent it out as many times as you want and
you don’t owe the studio another dime. When you have a digital movie on a
server, every act of streaming it to a customer constitutes “copying”, subject
to a license fee. And the studios want to milk that revenue source for all
it’s worth and then some.

------
griffinalliance
I think they renamed the DVD service so that it allows them the flexibility to
sell it off at a later stage, I dont see anyone mentioning this but it is
quite common for businesses to sell parts of the business to gain cash to pump
into their future expansions. In this case it makes sense to put 100% into
streaming.

~~~
joemysterio
I agree. They had to know they'd confuse and alienate people by changing the
name of the service _and_ creating an whole new website for people to figure
out. But it does allow them to extract the highest value should they sell it
off later (and they will).

With plans to sell there was only two things that would have been even more
bone-headed than what they did:

:a => "Sell it as Netflix DVD (or something like that) and have two companies
named Netflix running around."

:b => "Sell it and force the acquiring company to change the name, in which
case they would have to accept a huge discount on the value of the business."

------
tibbon
I'm guessing someone in PR wrote a letter just like it. Then the CEO decided
that it didn't really have the emotion and humility that the one posted had.

Sure, PR can spin anything to seem pretty, but sometimes its really just
better to admit failings (pricing changes) and show that you're not perfect.

~~~
BlazingFrog
If Hastings admitted to a mistake, it's for failing to explain what they were
doing more clearly. His words: " It wouldn’t have changed the price increase,
but it would have been the right thing to do."

Am I the only one hearing a hint of condescension here?

------
foulmouthboy
The whole point of the original email was to recognize that their pricing
changes made them seem out of touch. What's so bad about a CEO apologizing to
his customer base? Also, I'll always take product name critiques with a grain
of salt. I remember when people were complaining about how awkward MacBook Pro
sounded. Don't even get me started on "iPod". If the service is good, then
people will use the name and avoid the confusion that's been happening with
the soon-to-be previous Netflix configuration.

~~~
pork
Hell, remember ipad? Sanitary napkin jokes, pundits predicting doom, and a
stoic Jobs? But it's almost become the "xerox" of tablets. Unfortunately, the
name is the least stupid aspect of Netflix's new plan.

~~~
uptown
I'd argue that the difference between iPad, iPad, MacBook Pro and Qwickster is
that it's very very easy to mis-spell Qwickster.

It could be Qwickster, Quickster, Qwikster, Quikster, Qwickstr (if you wanna
go the Flickr route) and probably some variations I haven't thought of. At the
very least, Netflix should have made an effort to secure the domain-names for
these alternate spellings to ensure their customers can find them when they
finally go live.

~~~
Bud
The other difference is that Qwikster is a deeply stupid name.

The other other difference is that iPad, iPod, iPhone, etc. actually describe
their eponymous products, and Qwikster doesn't recognizably describe anything.

~~~
_pius
_The other other difference is that iPad, iPod, iPhone, etc. actually describe
their eponymous products ..._

iPhone? Sure. iPad? Maybe. iPod? Definitely not.

It only seems that way because the iPod dominated the product category so
strongly as to become synonymous with "portable digital music player."

~~~
Bud
Huh? The iPad is pad-shaped and "pad" is a commonly-understood noun in the
tech world to refer to these devices.

Same thing for iPod. It's pod-shaped (or was when it was introduced) and it's
a pretty simple mental leap to classify this "pod" as a thing that you put
your music "into".

By stark contrast, "Qwikster" has absolutely no mental, cultural or conceptual
link to the product or service it describes. It's worthless as a name in
addition to being confusing, already taken by various other services,
impossible to spell, and dorky.

Not really debatable.

~~~
_pius
What does a "pod" have to do with playing music? Less than what being "quick"
has to do with a DVD delivery service, in my opinion.

Not saying I like "Qwikster," but it's just not the case that the word "iPod"
sounded like a music player before Apple made it famous.

------
wccrawford
I think that would solve the crisis of people hating the name, but it's not
going to stop all the people who are angry about having to maintain 2 queues.

------
dugmartin
The problem with using "Netflix Classic" is it wouldn't allow them to sell it
in 12 months as a distinct brand so they can get the dropping subscriber
numbers off their books.

------
tomkarlo
The name change and web site split is obviously the prelude to a spin-off.
They split their stock between the streaming business and the mail business,
shareholders get shares in both (and the right to hold or sell the portion
they prefer) and the two businesses go their separate ways. It's a really
smart way to deal with a company that has a developing business and a mature
but declining business, and it will probably unlock significant value in the
stock market value, because it lets people cherry pick which business they
want to invest in.

------
superkinz
Would have been better if they attributed the change to getting squeezed by
Hollywood. At least people could sympathize rather than make Netflix into a
villain. I suspect the change came in large part due to payment terms on all
accounts as opposed to accounts consuming media.

~~~
jfruh
That might help with their relations with customers, but probably wouldn't
endear them to the media companies they have to negotiate with. Those
negotiations are no doubt already pretty tense, and Netflix shouting loudly
about what jerks they are won't make them less so.

~~~
crenshaw
I don't even think you need to call them jerks. Just say something like, "Our
new licensing deals have us moving to a model where we are charged, not for
how often you stream video, but for everyone who could potentially stream
video. This means that if you're not watching our instant streaming at all
today, but only using the DVD service, we still have to count you as a head.
So we decided that the best way to handle this was to separate our DVD from
streaming service. This way we, and you, pay for the services you use, and not
what you don't.

Now you may then ask, 'why the fee hike?' Simply put, the math doesn't add up
otherwise. To keep $9.99 pricing we'd have to do something like $4.99 for DVD
rental and $4.99 for video streaming. Compare our DVD pricing to Blockbuster
-- even at $7.99/month we're still cheaper. $4.99 for video streaming would
only barely cover our licensing costs. We found a reasonable price point that
allows us to offer great DVD and streaming services going forward."

------
dave1619
This letter is genius. If Netflix had sent it out I think it would have
averted the entire crisis.

~~~
tyree732
I don't think any of the serious complains about the letter had to do with the
new name or the tone in which it was delivered. I don't think anyone would
cancel their service over the name Qwikster or because the CEO is a jerk.

The real complaints dealt with the separation of the services and thus the
separations of the ratings system and of queue management. This letter does
not address either of those issues, and thus would fix nothing.

~~~
Elfan
The fake letter doesn't separate them:

> Members can log into both sites using the same login. This will allow
> streaming-only members to add DVD by mail, and DVD-only members to upgrade
> to streaming, at any time. The websites, however, will remain separate, so
> that we can start giving these different worlds the unique attention they
> deserve.

~~~
tyree732
> The websites, however, will remain separate, so that we can start giving
> these different worlds the unique attention they deserve.

Sounds like they are being separated to me.

------
raganwald
[http://raganwald.posterous.com/netflix-and-the-costs-of-
cour...](http://raganwald.posterous.com/netflix-and-the-costs-of-courage)

------
steve8918
I still think the separation of the DVD and streaming businesses was to
"firewall" the cash flow of the DVD business, so that content providers
couldn't use that against the streaming business in negotiations. This would
severely limit the amount of money that a content provider could charge
Netflix streaming.

But it's fairly obvious that this plan was too qwikly put in place, without
proper due diligence. They didn't even bother to get the rights for @Qwikster
on Twitter BEFORE announcing this, which was a huge PR blunder. 2 weeks ago,
they could have bought the name for $1000 from this pot-smoking kid, but now I
think it's worth at least 6 digits to them, just to end the embarrassment.

------
kreek
I like the idea of keeping it under one brand but Netflix "Classic" reminds of
me of "Classic" Coke. It's like AT&T calling home phone service "Classic"
phone :)

It could be Netflix:Online and Netflix:Offline or Netflix:Instant and
Netflix:Delivered etc.

------
Jun8
"Common sense is not so common"! This is incomparable to the actual post, it
highlights the positive points and addresses some (though not all) FUDs.

Similar to HP, Netflix made the huge mistake of announcing big changes in one
big lump, creating a chaotic reaction. They probably should have waited a
little to announce the split.

Keeping the Netflix name for both companies would have been a great idea (see
the two Motorola companies), as commented here it was done this way most
probably because they will sell the DVD business and use that money to invest
in streaming.

~~~
initself
The gave their future competitor a pretty crappy name!

------
sbkirk
I prefer the original. I got the email as a customer and felt like it did a
decent job for what it was trying to do.

------
yesimahuman
I think "Netflix Classic" would be a poor name for the old service. It would
be shortened to "Netflix" in conversation and cause a whole host of problems
and confuse customers which "version" they were on.

~~~
jfernandez
It's also a poor idea to use a subdomain for the main entry point to a
separate service (by their design), i.e. users of 'classic' will still type
'netflix.com'.

------
janesvilleseo
In order for them to survive, they have to split their customers. It sucks,
big time. They don't want to do it, but those who own the content are holding
a gun to their head. So they have to chop their customers into two so that
7.99 is palatable to both their customers and their bottom line. And they are
playing nice so that gun doesn't get bigger and blow a larger hole in their
wallet.

------
rglover
Regarding this suggested letter, the author is spot on with how this should
have been handled. There's really little reason for taking the DVD portion of
the company and rebranding it under a totally different (and poorly selected)
name.

I don't understand why Reed and the rest of the team at Netflix are throwing
away such an incredible business. Like any business that offers both old and
new options, they should have merely announced a plan (much like what was
suggested in this letter) to slowly phase out DVDs and educate their customers
on the benefits of streaming (as well as developed a plan for making more DVD-
only content available via the streaming service). This just feels like that
scene in the Beach where the guy gets his leg bit off by a shark and is taken
out into the woods to die slowly. Despite this mistake, I still love Netflix
(it's my primary source of television save for torrents). I hope they can
recover from this and really turn around the brand. If not, I'll be really sad
if I have to subscribe to cable again.

------
mdda
Even if they're separate companies, Qwikster and Netflix should license (for
pay) the queue information between themselves.

That way customers will remain happy, and the Qwikster brand could be sold to
someone that wanted a business that has a sustainable deal with the content
providers...

------
iradik
Change the implementation, not the API.

Netflix broke their API with their customers, so they're gonna be confused and
upset. No explanation, no matter how good, will fix that.

It's like when you write a long comment in some code to explain why your code
is goofy. Just fix the code!

In this case netflix needed to make their site more usable and make the
pricing distinctions between streaming and dvd more clear.

New company, new prices, new billing options. Wayyy to much info for your avg
customer. Netflix is way too confident if they think, customers won't cancel
their plans with all these questions being raised. Once a customer starts to
think about all these options, they might just think I don't really use
Netflix much anyway!

------
jmilloy
A DVD-by-mail queue makes sense to me. What does "queue" mean in a streaming
service, especially one where availability is frequently changing? In fact,
DVD-by-mail and streaming services require and invite dramatically different
management by the user.

I don't want a unified queue, because I don't want a queue for my streaming
service. I can think of many ways in which I would want integration between my
activity in each service, of which a unified queue is one of the least
innovative and least helpful.

I have to believe that, even if Netflix/Qwikster can't provide useful
integration, someone can. Despite my initial negative reaction to the split,
these opportunities actually make me a little excited.

~~~
morrow
I think for a lot of people, myself included, a queue is simply a list of
movies I'd like to see, in roughly the order I'd like to see them. Choosing a
delivery method for the movie is a secondary thought, that right now is dead
simple to do -- given availability information for the movie for each queue
type, simply click the button for the available queue that best suits your
needs. You also have the ability to see and play movies that become available
to stream while sitting in your DVD queue, and can move a movie from your
instant queue to DVD if you'd like. The two services blend well enough
together to form a layer of abstraction, letting you use Netflix as a unified
movie-finding-and-watching platform instead of just as a "DVD delivery
service" or "Movie streaming service".

I believe that DVD will eventually die and streaming will be the primary way
to watch movies, but the streaming selection just isn't there right now, and
splitting the company like this forces customers to deal so heavily and
directly with delivery methods that it dissolves that abstraction layer that
made Netflix so valuable in the first place. They now have to sell potential
future (and unhappy existing) subscribers on 2 new separate products: a "DVD
delivery service" and a "movie streaming service", neither of which really
measure up the the way the combined system did, and for the same price!

------
brackin
The core issue here is the pricing change wasn't just about making more money,
the main reason was Netflix had to pay a lot of money for users with Streaming
included but had never used it.

As they had to say in the licensing "x amount of users have streaming" when
only a percentage had ever used it".

The idea was they could now say "These users are specifically paying for
streaming". They'd already split up the two plans into two different business
departments.

In my opinion they should have offered a streaming plan, DVD plan but let DVD
users pay a small premium to access streaming instead of doubling their core
users bills, if they wanted to sort this licensing issue.

------
lubujackson
The problem is everything wrong with the Netflix changes makes sense... if
you're Netflix and hellbent on selling off your DVD business. Of course they
didn't consider the users in all of this - the whole point is to shed Quikster
as quickly as possible, probably by selling it to Redbox or Amazon or
something.

That's why we can't have a shared queue or keep the same name or keep the
pricing unified on the bill. All of this is simple to do if Quikster is a
subsidiary but I wouldn't be surprised if Netflix already has a buyer for
Quikster lined up. These changes have the stink of "buyer requests".

------
jerrya
Netflix has handled this so badly for customers and investors, and so
obviously badly at that, that I can either believe they are incompetent, or
that there are hidden factors (lawyers) at play.

The conspiracy theorist in me leads me to suspect it's somehow related to cost
of licensing content for streaming, and negotiation positioning with
Hollywood. That by burning the DVD bridge, Netflix can somehow lower costs
dramatically or make their position in negotiations better. (But don't ask me
how.)

Otherwise I have to believe Reed Hastings picked the wrong week to start
sniffing glue.

------
lubujackson
An interesting point about the name Quikster - they took the ONE weakness of
the DVD by mail service (you have to wait a few days) and made it the
centerpoint of their name. Completely tone-deaf branding. Not to mention
archaic domain naming (-ster? Friendster was a long time ago and doesn't have
a nice shine anymore). I don't work in marketing, but I couldn't imagine much
worse unless they tried on purpose. Maybe "Shitster."

~~~
aridiculous
It's easy to remember but that's about it. It literally could describe
anything: oil change service, magazine publisher, board game company.

It's kind of refreshing to see such a textbook, illuminated lesson in bad
management in the tech world, when usually all we get to see are the all-
stars.

------
sambeau
By keeping one brand it becomes more difficult to sell-off the silver disk
business without impacting the download business negatively.

Better to make a clean break now.

The only way the Netflix Classic plan makes any sense is as a staging post to
splitting the company in two. This would have been good PR as well as a
sensible internal business step. It lets everyone get used to the idea
gradually.

------
deweller
Keeping the logo and the word Netflix in the new company name makes it less
attractive should they wish to sell it off. Just sayin'.

~~~
adharmad
Rebranding the DVD company is relatively easier than the streaming one due to
the many devices in people's homes which are "netflix enabled"

------
codeslush
This says it all: <http://theoatmeal.com/comics/netflix>

------
kcurtin
This letter isn't in line with Netflix's strategy. They want the Netflix brand
to be completely unassociated with by-mail DVDs. Sure Qwikster is a stupid
name, but in a years time we will think of it as it's own entity/brand.
Netflix classic would not accomplish this.

------
ckenst
I'm fine with the changes Netflix made, although I would prefer to login to
only one site.

------
pshapiro
Just me or does that sound awfully close to Apple's marketing language? "We
think the benefits are going to be huge."?

------
absconditus
People would have bitched no matter what they said. The level of entitlement
in modern society is pretty shocking.

------
neduma
Impressive discussions. I like the Spotify model compared to Netflix. Care to
comment?

~~~
spullara
The Spotify streaming model is the same as the Netflix streaming model. They
just have far fewer licenses. What do you see as distinguishing
characteristics of Spotify over Netflix beyond available content?

------
durga
Terrific - couldn't have phrased it better. Only missing item is maintaining
ratings/carrying them over.

I wonder if Reed hastings was drunk or high when he made these announcements
and wrote that blog post. Hard to believe someone who built a business so
shrewdly could screw up like this..

------
plink
Quikster sounds too much like Amway's failed Quickstar. Classy.

