Netflix's leadership has decided not to follow through with a plan to spin off the company's DVD-by-mail operations.
What that means is the service, called Qwikster, is dead, at least for now, barely three weeks after managers disclosed their intentions. It also means Netflix customers get something akin to their old service back, the one that enabled them to go to one site to watch videos streamed over the Web as well as order DVDs for home delivery. Netflix, however, didn't back down on price; access to movies streamed over the Internet as well as DVD rentals will still cost $16 per month.
Last month, Hastings riled already frustrated subscribers by telling them that Netflix was dedicating itself only to streaming. If they wanted to rent discs they would have to go to Qwikster, which would require a visit to a new Web site as well as a new account, password, and even an extra monthly bill. Critics said Netflix was doing the unthinkable: making a successful, simple service more complicated. Michael Pachter, an analyst who has covered Netflix for years, called the move the "dumbest" he's seen any company make in a long time.
Apparently, Netflix got the message.
"Consumers value the simplicity Netflix has always offered and we respect that," Hastings said in a statement. "There is a difference between moving quickly...and moving too fast, which is what we did in this case."
The public got word about Qwikster two months after Netflix announced it would discontinue a popular subscription plan that offered access to the company's streaming video library as well as DVD rentals for $10 per month. Scores of subscribers were angered that Netflix would charge $8 for streaming access and an additional $8 for DVDs, raising the price $6.
Well, at least Netflix reversed itself on Qwikster and that should be welcome news for subscribers. Hastings, who is recognized as one of the tech sector's most consumer-friendly CEOs, is coming to the public once more, hat in hand, admitting he erred. He said last month that he "slipped into arrogance" for the cavalier way the company delivered the news about the price increase.
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We can only hope that the CEO realizes now that all the consumer goodwill he generated over a decade--ridding us of late fees and long waits at traditional video stores--is not to be trifled with. What Netflix needs now is some stability.
Whatever is going on internally that has Hastings and crew making uncharacteristic mistakes, he should take pains to find their source and fix them.
I think subscribers will get over the price increase, as long as Netflix continues to build out the streaming service. The bigger the selection, the smaller the price hike will seem. So, hopefully that is Netflix's No. 1 priority, along with not generating any more headlines.