Remember when Netflix was a business that cheaply provided a service people wanted? Now Netflix and Qwikster are two businesses that less cheaply provide services that people only kind of want.
On Sunday night, the CEO of Netflix announced, in what may go down in history as the World’s Worst Apology Letter, that Netflix is sorry about doubling the price subscribers had to pay and, by the way, it is now dividing into two businesses, one to supply online video, the other — named Qwikster — to continue mailing you DVDs in red envelopes.
It’s the great Mitosis of 2011.
Netflix CEO Reed Hastings wrote:
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.
... So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: 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....
Some members will likely feel that we shouldn’t split the businesses, and that we shouldn’t rename our DVD by mail service. Our view is with this split of the businesses, we will be better at streaming, and we will be better at DVD by mail. It is possible we are moving too fast — it is hard to say.
As Rob McKaskill noted in the comments: “Breaking News: phone companies are separating the talking and listening services they offer. Now, you'll have one phone for talking and another for listening. This will make it simpler for users and allow the company to focus better on improving the two separate services. (They consulted with the New Coke developers to make these changes more appealing to the public.)”
This about sums it up.
Here is what Hastings should have written.
Dear Netflix Customer,
We realized that DVDs by mail and streaming are quickly becoming two different businesses with different cost structures and different benefits (“watching movies” versus “watching movies”) that need to be marketed differently. Qwikster will be the same web site and DVD service that everyone is used to, except for the fact that it will be a different Web site.
Literally everyone who gets this e-mail will likely feel that we shouldn’t split the businesses, and that we shouldn’t rename our DVD by mail service. To them we say, “That’s fair.”
I understand how apologies work. An apology is what you write when you feel that you have done nothing wrong, and you want to tell people that you are about to add insult to injury by renaming your DVD-in-the-mail service Qwikster. We selected this name in case you were worried that Netflix was not actively trying to scare your business away. Qwikster is short for Quick, I Want To Come Up With A Stupid Name No One Will Be Able To Spell Or Remember. We chose it after long deliberations where we weeded out any name that didn’t sound like a dairyless creamer, illegal download service from the late ’90s or an awful virus that destroys your laptop’s memory.
We are trying to show the film industry that there is no demand for DVDs by mail so that they will start letting us stream things faster and with a better attitude. Your continued demand for DVDs by mail is not helping our case.
We tried pricing you out. That failed. Now we are trying to shame you out. Consider: Do you really have enough dignity to subscribe to something called Qwikster? We’ve even changed the logo. The image that appears on your Qwikster DVDs is a detailed line drawing of two nude figures engaged in an act forbidden in certain Southern states. Okay, it might not be, but can you afford to take the chance?
Stop renting DVDs by mail! We understand that the selection of DVDs we can mail you is still huge and the selection of online streaming is still, well, not huge, but trust us, if you watch “Megalodon vs. Steven Seagal 8” a third time, it’ll grow on you.
Don’t you realize that the Internet exists? Using the Internet to order DVDs by mail is like using the Internet to order books by mail —
something a lot of people still do and are willing to pay for something that in 20 years will be the basis of a lot of robot stand-up routines. Don’t make us the laughingstock of the robots.
Please stop ordering DVDs by mail. Please.
Netflix NOT Qwikster, Who Would Subscribe To Qwikster? It Sounds Lame, Am I Right? CEO