Netflix C.E.O. Apologizes for Handling of Price Increase
ELIZABETH A. HARRIS, On Monday September 19, 2011, 2:16 am EDT
In a letter
posted on the Netflix Web site late Sunday night, the company's chief executive, Reed Hastings, apologized for the way he handled recent changes in pricing and subscription services, which were announced this past summer and have since caused Netflix customers to walk away in droves.
"I messed up," Mr. Hastings said. "I owe everyone an explanation."
Mr. Hastings also announced that the DVD-by-mail service, where the company began, will be renamed Qwikster. Those distinctive red envelopes will become part of a separate brand with its own management team.
The name Netflix will remain for movie streaming, according to the statement, which was posted around 9 p.m. Pacific time. Qwikster and Netflix will now appear as separate lines on customers' credit card bills.
The price of the company's services will not change.
"We're done with that!" Mr. Hastings said.
It was, after all, just that kind of change that prompted outrage among Netflix customers this summer, when the cost of a subscription that included unlimited online movie streaming plus one DVD-by-mail at a time went from $10 per month to $16 per month. That 60 percent increase
has cost the company about 1 million of its 25 million customers, a greater exodus than they expected
, company representatives have said.
But Mr. Hastings did not apologize for increasing subscription fees, or for asking customers to think about the two services separately. Instead, he blamed his own "arrogance based upon past success" for a failure to communicate in the face of a fast-changing business model.
"We realized we should have communicated better in July when we announced the price change," said Steve Swasey, company spokesman. "That's a mea culpa on that."
I didn't think it was possible for Netflix to make their choices worse but then I saw this article.
It's really interesting how money and power can corrupt one's character.... He's one arrogant SOB.
I use to love Netflix.... I do understand that the movie industry is sabotaging them but they are doing a good job themselves as well.
I'm going to have to dump them....