Reed Hastings

apparently somebody needs to tell netflix, reed hastings, dan snyder, adam sandler and the rest of team edgywhiteguys™ that they don’t get to tell people what to be offended about and when it’s ok for them to be offended - especially not Native Americans

Netflix admit they were arrogant and messed up

Netflix admit they were arrogant and messed up

The CEO of Netflix has come out and said what we all knew, they messed up by changing the subscription model and it is costing them a ton.   The Chief Executive apologized to their loyal subscribers today saying that the switch was “arrogance based upon past success” and then announce they are separating the DVD and Video streaming services.   Reed Hastings, the company co-founder and current CEO said in his blog post, that he owes “everyone an explanation.“, he went on to say "We have done very well for a long time by steadily improving our service, without doing much CEO communication. Inside Netflix I say, "Actions speak louder than words,” and we should just keep improving our service,“.   Netflix recently raised price by up to 60% which see over half a million subscribers drop off and shares take huge hits. They still have in-excess of 20million subscribers and dominate the industry, but with this major failing, it has opened the door for fresh competition to enter the market, and that is exactly what they wouldn’t of wanted to happen.
Netflix Spins Out Qwikster

Big, long awaited news from Netflix:

Erick Schonfeld via Techcrunch

Netflix CEO Reed Hastings just dropped a bombshell. In the wake of a rapid decline in Netflix’s stock price last week, Hastings is taking a bold step by separating the DVD and video streaming services. The DVD-by-mail service will now be called Qwikster, and the streaming service will maintain the Netflix brand. That’s right: the new business (streaming) will keep the existing name.

Why people think this is a ‘bombshell’ is beyond me. It’s an obvious move, as I said two months ago when they made major price changes:

Stowe Boyd via stoweboyd.com

Since the plans changed, I realized that I had let my DVD queue go empty several times in the past months, so I just don’t need as many DVDs as I originally did. Just one at a time for the occasional movie that is not stream-configured yet.

So I think Netflix will lose some money from people like me defecting from discs, and gain some from people signing up for unlimited streaming with a disk or two at a time.

But both the DVD-only and streaming only businesses can make money at the lower tiers, which must have been a loss leader for one or both services, before.

And by breaking out the team managing the DVDs, Netflix might be preparing to spin it out:

Jessie Becker via Netflix blog

Last November when we launched our $7.99 unlimited streaming plan, DVDs by mail was treated as a $2 add on to our unlimited streaming plan. At the time, we didn’t anticipate offering DVD only plans. Since then we have realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members. Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs. Creating an unlimited DVDs by mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs by mail offering. Reflecting our confidence that DVDs by mail is a long-term business for us, we are also establishing a separate and distinct management team solely focused on DVDs by mail, led by Andy Rendich, our Chief Service and Operations Officer and an 11 year veteran of Netflix.

And the future CEO of DVDFlix?

So, I was wrong about the name, but otherwise, this was an inevitable step to move away from the legacy tail of shipping DVDs. And Andy Rendich is the CEO, obviously part of the plan.

I don’t think Hastings was responding to market moves: he had planned this all along.

Update: 7:06am EST - Amazingly negative response on the Netflix blog, with many users complaining about the increased headaches of managing two queues. But we already were managing two queues, one for the DVD and one for the streaming titles, so I don’t get that. Personally, I have been using InstantWatcher as the UI for the streaming service, and only adding things to the DVD queue that I can’t find.

related

blog.netflix.com
The Birth Of Qwikster

Netflix CEO Reed Hastings first apologizes for a lack of communication, and then gives his thoughts about the recent price changes and separation of DVDs and streaming (which is still the right move, as Hastings reiterates).

The wording is good. Amazingly, it doesn’t sound like the total bullshit you usually read in such posts. But here’s my favorite part:

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) because they are afraid to hurt their initial business.

When I read this, I have one larger thought than Hastings: Microsoft. 

Why is legacy Windows and all its baggage a part of Windows 8? Because of Hastings’ last sentence above. 

He continues: 

Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.

We see this time and time again. Complacency. These thoughts are nothing new. But what’s great is Netflix’s gumption to execute — stupid name or not.

Also great: Hastings is on Microsoft’s board. There is still hope.

facebook.com
Netflix's Reed Hastings: "Comcast no longer following net neutrality principles."

I spent the weekend enjoying four good internet video apps on my Xbox: Netflix, HBO GO, Xfinity, and Hulu. 

When I watch video on my Xbox from three of these four apps, it counts against my Comcast internet cap. When I watch through Comcast’s Xfinity app, however, it does not count against my Comcast internet cap. 

For example, if I watch last night’s SNL episode on my Xbox through the Hulu app, it eats up about one gigabyte of my cap, but if I watch that same episode through the Xfinity Xbox app, it doesn’t use up my cap at all. 

The same device, the same IP address, the same wifi, the same internet connection, but totally different cap treatment.

In what way is this neutral?

Hastings’ point: Comcast favors its own Xfinity services against those of video-on-demand competitors, including Hastings’ own Netflix. Knowing this, would you be less likely to use Comcast, or does it matter to you?

I messed up. I owe everyone 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. I’ll try to explain how this happened.
— 

Reed Hastings, Netflix CEO in an Official Statement | Indiewire

Also, your DVDs by mail will now be labeled as Qwikster and have new branding.

Netflix wants to abandon this whole Netflix thing and just be HBO, basically

Continuing a trajectory that will make a fascinating cautionary example for some future business class, Netflix CEO Reed Hastings has made explicit his intentions to transform his company from a once-powerful titan of a unique industry into an ordinary cable channel, saying it was Netflix’s “natural direction” to be bundled in an ordinary cable package someday and provide an ordinary sampling of cable offerings. 

Somebody get Reed Hastings a new shovel. He was digging his own grave so fast the old one broke.

Qwikster ends quickly

Online movie vendor Netflix put the brakes on spinning off its DVD-by-mail service into a separate site previously announced as Qwikster.

CEO Reed Hastings said Monday that consumers were largely unfavorable to the announced website mostly due to difficulty and confusion in maintaining two accounts.

The company’s plan to charge for separate streaming and DVD services, however, will remain, Hastings said. more

Any cinema-philes already losing faith in Netflix?

Weigh-in at The Rant on FOX5Vegas.com or on The Rant Facebook page.

Does Comcast actually owe Netflix a share of broadband Internet subscription fees? Before dismissing the question out of hand, take a second to consider; in May it was reported that Netflix accounts for 25 percent of all North American Internet traffic. That’s a whopping number, and one that puts pirating of copyrighted material to shame, as a percentage of overall Internet usage. 

So do ISPs then owe some of there growth to Neflix? At the All Things D Conference, Netflix CEO Reed Hastings had this to say:

We haven’t yet said [to broadband providers], ‘Of your $40 [per month] broadband [service], we are 30% of the traffic, so we want 30% of the revenue,’“ he said, according to a transcript by BTIG LLC. "We haven’t done that, [so] there is still a good relationship.”

That’s one side of the argument, and one that would likely resonate with the movie-streaming public. However, those in the know say that Hastings in bluffing, in the face of tighter restrictions on bandwidth, with net neutrality facing an uncertain future.

Michael Patcher, and analyst with Wedbush Securities had this to say:

“The Netflix service adds a layer of cost to broadband service, and it is inconceivable that a significant number of Netflix users sign up for broadband solely to access Netflix. That’s like Angry Birds creator Rovio asking Apple [Inc.] for a portion of iPhone revenues and asking AT&T [Inc.] for a portion of data-plan revenues … simply a silly concept.”

If Angry Birds comprised 30 percent of traffic to the iTunes App Store, this line of argument might carry more weight. After all, Netflix put together the business model and content partnerships that drive the traffic over ISPs networks. Angry Birds, as an app, is one of more than 500,000–albeit a riotously popular one. 

Despite the huge swings in our stock price since our 2002 IPO ($8 to $3 to $39 to $8 to $300 to $55 to $330), we’ve continued to grow our membership every year fairly steadily. We do our best to ignore the volatility in our stock. The progress we’ve made over the last 10 years is stunning. We want to make the next 10 years even more remarkable.
— 

Reed Hastings, after Netflix beat quarterly estimates once again, sending the stock soaring to new all-time highs.

You could certainly argue that Netflix is an even more volatile stock than Apple — because it clearly is. And Hastings is smart to try to calm the furor in a time of exuberance. You’re never neither as good nor as bad as they say you are — but you can only really say that when they’re saying you’re good.

Still bloodied by one of the worst self-inflicted corporate disasters in recent memory—last year’s $12 billion wipeout—Netflix C.E.O. Reed Hastings remains adamant about his goal: moving from red envelopes to streaming video. With Hollywood hailing his vision and needing his business, Netflix has started to rebound. But not everyone is sold.

Read story here by William D. Cohan; photo Illustration by Sean McCabe.