Monday, September 19, 2011

Fwd: An Explanation and Some Reflections

Dear Mr Reed Hastings,
   I love Netflix, but you need to stop digging a deeper and deeper hole.

Qwikster, why, why, why,  I can only shake my head in disapproval.

 Part of the appeal was the combination of DVD and Streaming in the same listing so that if it wasn't available now, I could get it tomorrow.
 Do you really want to separate out these services and become like everyone else?

 Whom every your taking advice from is not your friend. You need to look elsewhere for guidance, I am telling you now. 

 First there are several things I'd do.

 1.) Just renew the Stars content for deal for 300 Million.  It was good for both of you.  REALLY.
    They are doing themselves and your company a disservice by starting yet another competing service.
    Both you and Liberty will in the end fragment and commodify content and this is bad for everyone.

 2.) Open up to more foreign and Independent content.

 3.) Open to funding original content, cut deal with SciFi channel or similar.

 4.) Find a way to allow people to share movies via Facebook and other simple URL's.  Not actually sharing the file, but links, viewable by subscribers.
    This should be then expanded in partnerships with HULU and other services. So your tinyurl like video link service works for anyone with TV and Movie format content.

 5.) Lead the charge on publicly funded content, and copy left movies.

 6.) Expand beyond Al-la-cart and offer some pay per content and free content to non-subscribers (maybe with adds). This could be section out to different parts of the site or different sites.

 7.) Stop day dreaming that you can play nice with the rest of the industry and they will play nice back. It's an illusion, while the surround you and kill you off and take everything you have away from you.
    Hollywood is the biggest pit of snakes and vipers. The friendlier they act to you, the worse they will treat you when screwing you over. They actually will take delight in it.

 8.) Support open source Operating system based on Linux and BSD.   Copy protection bla bla bla.  Well HDMI is already cracked, Sure you don't want them accessing the raw MP4 stream. Well odds are it's already on bit torrent.
     Worse case fro now, just distribute binaries.  Yea I know you still need to cow-tow to the content owners. Do what you can, worst case, not all movies are available on all platforms.

 9.) Silverlight?!?! What were you thinking?   You don't need these guys! Really Microsoft is not helping you.

10.) Expand.  You could sell so much more though your web site.  Really make it the movie lovers site.  Sell collectables, screen savers, and desktop backgrounds.  Promote new movies, and work with theater owners.

11.) Contact me and let's do an NDA, I can show you what I am working on and how you can take over the industry...

 I hope this helps.

John L. Sokol - Loyal Netflix Fan. 

---------- Forwarded message ----------
From: Reed Hastings, Co-Founder and CEO of Netflix <>
Date: Mon, Sep 19, 2011 at 4:57 AM
Subject: An Explanation and Some Reflections

Dear John,

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 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 and 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 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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