Netflix CFO David Wells acknowledged today that “we’re a more humble team” following the consumer and investor backlash from a series of PR blunders. The company plans to ”step back and look at all options and what we’ll do going forward” to satisfy consumers who were angered in July when the company said it would split its video streaming and DVD rental services — increasing prices by 60% for those who wanted to continue to have both. Lowering the price doesn’t seem to be on the table. That’s “a little bit like kicking the can down the road,” Wells said at the Goldman Sachs Communicopia Conference. “I don’t think it’s going to win back the customers we lost.” Instead, Netflix likely will secure more content and “repair that trust with the consumer over time.” Defections spiked shortly after the announcement, “but it went to zero shortly afterward.” The recent decision to rebrand the DVD business as Qwikster ”introduced additional volatility into the consumer picture.” But the decision to have Qwikster also rent video games is “a signal that we’re continuing to invest and not abandon that consumer.”
On the competition front, Wells declined to comment on the likelihood that Amazon will beef up its streamed programming to feed a tablet computer it plans to release — or Dish Network’s plan to increase its offerings for a Blockbuster-branded service. “Inasmuch as we are a best in class entertainment service, there’s no reason they have to build their own or buy their own,” Wells said. “The more we’re viewed as a competitor, the less they’re likely to partner with us.”
Netflix’s own streamed offerings will focus more on TV shows following the collapse of its negotiations to renew its deal with premium channel Starz. “They were asking too much,” he said. With movie rights so closely tied to premium cable, the company is taking advantage of producers’ growing acceptance of digital streaming — and eagerness to collect Netflix’s cash. “What you’ve seen over the last 12 to 18 months is a move from people being reluctant to license to Netflix to (saying), ‘gee, Netflix doesn’t play in day-and-date, and I don’t see a huge cannibalization’” of TV viewing, he said. Netflix isn’t looking to become a content creator but might “experiment” with projects such as the original series House of Cards, due to be streamed in 2012. Netflix typically pays producers a fee based on the number of hours their content is viewed.
How did Wall Street respond? Netflix shares rose shortly after Wells began his presentation — but soon fell again. The company closed at $128.50, down 1.2%.


When I spotted the word “humble” in that daft e-mail, that was the point where I thought, “Horse shit!” Then the whole Quickster/2 web-sites/double-billing thing hit & I thought, “Piss off!” That was the point where I was done w/Netflix.
The stupidity is just to overwhelming for the lack of streamable content & the loss of DVDs/billing BS just made it nothing I wanted to bother with.
I understand the reasoning behind dividing up the dvd & streaming market but if you are asking consumers to choose one over the other you should make all DVD’s available for streaming — it takes months or years for releases to be streamed. Is this something that is going to be improved upon? or are we supposed to continue to subscribe to both services?
I terminated my membership with Netflix when everyone else did. Then, they offered me a free month if I joined them again. So I thought, “Sure, why not? Maybe they are less arrogant.” So I filled out the application form, clicked SUBMIT, and instantly got a message back from them saying that I had already been a customer so the free month offer was not available to me. I canceled the application and will never return to them.
I’m one of the lucky ones whose “membership” fee went down. I get two DVDs per month (1 at a time) and two hours of streaming for $4.99 plus tax. I’d like a referral to a website that will tell me if my Netflix Queue (past and present) will still be accessed easily.
Me, too, and I fear one day (soon) they’re going to tell me they won’t honor our original contract. I’m hoping in this climate, they won’t want to lose my $5.44 a month, but who knows..lol. If they give me any lip….I’m gone!
From the thousands of comments I read on this subject this week, the majority of members weren’t as upset about the price increase as they were about the DVD-in-the-mail side of the business being spun-off as Qwikster which would force them to unsubscribe to Netflix, subscribe to the new site and rebuild their queue all over again (or manage both sites if they wanted both DVDs and streaming). They’re still the best game in town (Blockbuster and Redbox have nowhere near the library as Netflix) so I’ll stick with them.
If Netflix continues to create Qwikster, they’re not listening to their customers and they’ll likely lose the majority of their customers considering their customers are going to have to unsubscribe to Netflix anyway to change over to Qwikster so they may as well subscribe to Blockbuster Online or Amazon or whatever instead.
That’s the biggest risk out there for Netflix outside of bandwidth caps (the latter of which they’re really going to have to address before more people turn to streaming).
Well, the biggest problem in them splitting the two services is that a) that’s why most people were with them at this point, the convenience of having two services in one, and b) by splitting them and forcing the customer to manage two websites, they’re encouraging the customer base to go comparison shopping. Customers who might have been fine to stay subscribed to Netflix after the whole price hike (and earlier, the elimination of friends list which made rating movies irrelevant and made Netflix lest of a destination site and social networking platform and reduced them to simple movie rental) can no longer carry on with their auto-renewing subscription. They’re FORCED to reevaluate their subscription plans and queues, which is never a good thing. I’ve been a loyal Netflix customer for more than 5 years even after the Strike 1 of the friends’ list elimination (which was done one day with no warning, thanks Netflix) and the Strike 2 of the price hike; so now with the Strike 3 of the website split, I’m going bargain hunting to see if I can find a better streaming service and a better rental site for hard copy material. And I’m determined that even if I don’t find better deals for both, or either, I will cancel at least one of the two accounts out of anger and dissatisfaction. If I don’t find a better streaming service, I’ll simply cancel the streaming portion of my plan with Netflix and stick with the mail order DVD’s, and be content with those until someone else like Amazon builds a better library. This entire series of customer relations snafus is now actively chasing away long-term Netflix customers– and that’s the base you want to keep as you continue to build forward. But no one can stay with Netflix out of consumer complaceny, because they’ve made that impossible– and that’s the thing that’s really going to continue to topple their customer base if they go ahead with the website split.
Terrible company. Terrible customer service.
I already have a streaming service for tv shows. I subscribe to Netflix streaming for movies. If they can’t secure the content, my days with Netflix are numbered.
“we’re a more humble team”
and then a few lines later:
“Inasmuch as we are a best in class entertainment service”
Okay, dude…
Probably one of the most horrible decisions they’ve made yet. And let’s get this straight. You’re going to take the most deeply FAILING aspect of your service (the Online Streaming, with it’s complete dearth of available titles) and make that a paid service on its own??
Bad call, Netflix. Enjoy the end of your success.
Of all of the films currently in my Netflix queue, less than 30% are available to stream. I guess I no longer need Netflix.
What an implosion.
“Inasmuch as we are a best in class entertainment service, there’s no reason they have to build their own or buy their own”
So… Hey Pepsi, don’t make soft drinks yourselves, just partner with Coke.
It’s called competition, genius… Is this David Wells person really st-pid or what?
SEC should check to make sure Reed is not shorting the stock off in the Cayman Islands. Netflix had as strong a brand loyalty as any service or product I can remember. These choices and the way in which they were implemented were the perfect strategy if you wanted to kill your brand. Why not gently guide the public towards the higher pricing? Why split the DVD onto a new website?
Job well done Reed…or is it Max Bialystock.
PR disaster. Poor communications. Epic Fail on every level of Marketing 101.
What was once a great company and service is quickly going down in flames. It’s OK, someone/something will fill the void. The market demands it, and so it will be.
so they think lowering the price won’t win back the customers they lost? sounds like they’re rationalizing being greedy. and as far as their library goes, i would say 90% of their product is unwatchable tripe. no wonder they can brag about a huge library; they fill it with stuff no one would want to watch in the first place. but their documentary and tv section is impressive, and that’s almost the only thing keeping me as a customer.
I cannot understand all the fuss about Netflix. It’s six (*)(*) dollars people. I only watch streaming, so I pay $8. Hello? What on earth can you buy for eight dollars? Or six for that matter? I don’t get the fuss. I think this is THE BIG MEDIA companies making something out of nothing because Netflix is such a monster.
I would think the metering by AT&T would be a bigger issue. If I were metered, my bill would be astronomical. But thanks to the fact I live in a building with an AT&T buzz in system, my usage can’t be counted. It’s off the charts. Netflix is on in my house from 5pm until 5am probably. Somebody is usually up all night watching something.
I can’t wait to see who Netflix signs next. Starz is not that big a deal. I want more TV shows, not movies.
They don’t just step in it . . . they track it all over the place, don’t they?
“I don’t think it’s going to win back the customers we lost.” Instead, Netflix likely will secure more content and “repair that trust with the consumer over time.”
They don’t have much of it, though. I predict that, come February (when NF says “goodbye” to Sony and Starz), many more subscribers will defect.
NF plans to focus their efforts on acquiring streaming TV shows? Why do we need to stream TV shows? Nowadays, between syndication, TiVo, DVRs, and cable, most new shows are repeated so many times, why do we need to pay for a streaming service to offer them? I WANT MOVIES, NOT TV SHOWS!
Now, I am considering terminating my relationship with NF in February, because I see no reason to continue if all I’m going to be offered is streaming TV.
Why wait? You paying for mostly crap now.
I have been a Netflix supporter for something like 5 years now. I actually have had an account since they first started and you could just go online and rent a single movie and then not rent another for 6 months if you wanted. Then it became a subscription service. Fine. It was easier to build a queue and have a title waiting for me in the mail when I got home than to head to my local chain video store. Then they introduced streaming. BONUS!! I never asked for it but I certainly took advantage of it every once in a while but 99% of the time it’s through my Blu-ray player on my big TV and not on my computer or any portable device. The problem with that is the streaming video doesn’t process the Dolby digital 5.1 through my sound system so the best sound I get is “simulated surround” if I run my TV through my sound system. You get no commentary or special features and the TV episodes are incomplete. You’ll watch a show and be all hooked into Season 3 only to find episodes 5, 9, 13 and 20 are not streaming. (This actually happened to me with “Magnum, P.I.”) I don’t use video on demand from my cable company or VUDU. My Blu-ray upconverts DVD to near High Def quality so, if I have to make my choice, I’ll dump the streaming and stick with my discs. I get better quality and better sound plus all the extras.
What I find amazing is that all I’ve seen written about Netflix for the past year or so was customers begging them to get out of the DVD business and tput more focus on streaming. That DVDs were the past, streaming was the now and the future and they needed to get more content.
This is essentially what Netflix has done. They’ve gone full on streaming and gave streaming it’s own revenue stream that can be used to buy more content. They’ve pretty much 100% did what their customers ASKED them to do. But now once they do that, all these other people crawl out of the woodwork crying over the DVD thing.
Netflix was in a lose\lose situation. Have entitled people bitch about the streaming service, or have entitled people bitch about the DVD service. Even in figuring out a way to keep both services going and profitable, and also adding the video games people have begged for for years, customers are STILL mad. There was NOTHING they could do that would not result in some sort of PR backlash from knee jerk, reactionary, entitled whiners that can’t handle change. The same people who freak out when facebook moves one button and scream and rant about boycotting the site.
At the end of the day this is nothing but a bump in the road. People are ranting and raving right not because “THIS IS NOT WAHT IM USED TOO!” but in 6 months to a year, everybody will have grown used to the changes and will be using and enjoying the service the same way they were before this was announced.
You kinda forgot to mention that they raised the price on both streaming and DVD services. Now, their streaming content (which I agree is the future) is about to get significantly weaker with the Starz deal expiring and they want us to pay more?
No thanks. I’ll come back later when Netflix figures things out (ie gets better content in a shorter window.) That, I will pay more for.
Not necessarily, and your overall views on humanity seem just peachy.
Netflix asked for a 60% price increase, about $70 to $75 more a year while simultaneously losing out on popular streaming deals with Sony and Starz – both of which they won’t get back. That price increase was so they could go ahead with streaming, but they’ve started off losing incredibly popular content. All they have left, studio-wise, is Paramount, which is still very iffy, for their streaming. Now they’ve made their website (now websites) less user-friendly, apologized for their arrogance, but then offered no restitution.
Not every consumer will be savvy enough to be aware of these intricacies, and I’m sure most would be content with the price increase if it had meant a larger amount of quality streaming titles became available. But Netflix streaming has remained stagnant. That’s why I will drop them soon. That and it’s “not waht I’m used too.”
Best way to rectify this situation is oust Reed Hastings as CEO and do some serious damage control for the many customers they have and will lose as a result of this stupidity. Here’s one idea for proposal…release the newest stuff on DVD like “Bridesmaids” for example, immediately instead of the BS 28-day wait period and have more titles available, such as WWE DVDs, which Netflix is always mostly out of and increase the DVDs per month at a reasonable rate from 2 to 3, if they want to bring stability back into their company.
This will go down as one of the stupidest business decisions of the year. Let’s see if Netflix even lasts until 2012 at this rate.
At least they didn’t have thousands of rental stores to unload.
Terrible customer service? Really? I find their customer service to be really great. Based out of Portland, OR too. That’s in the United States for all of you whiney people who can’t get out if your So Cal bubble.
Too late Netflix, I’m never going back to DVD’s when I can stream it or Redbox it –you fu%ked up.
“more humble” my backside…
that would involve a real apology and some real changes.
sheesh. I’m already over this garbage.
Customers are acting totally over the top about this. If I still wanted the DVD service this wouldn’t phase me in the least. There a business, people. DVDs and online content aren’t free. My opinion, they shouldn’t have apologized. People would have left (maybe) but in the long run this is the best decision for Netflix; people will either get aboard or they won’t. They will probably attract more people to their streaming service with the 7.99 price point, which will give them a greater ability to fight for content with increasingly greedy studios.
Besides the lack of titles for streaming, has anyone noticed the amount of bluray available in their queue? I’d say only about 25% of mine have bluray as an option. So now that I bought a PS3, 1080p tv, I have to watch a dvd? lol
One thing I will say about Netflix to sort of go against the “corporate greed” theme. Long story short, I got my Xbox, added Netflix when it became available. At the time I was a disc only member, and I had to call because of an issue with the Xbox setup. Well the customer service rep told me I was “OVERpaying” and I could get away with an $8 a month charge if I only wanted streaming. To me, that is the opposite of greed, when you’re telling your customers they can pay less.
Hate the split queue and will probably bail because of that, but for 7 or 8 years I thought they had fantastic service. Sorry to see this happen.
Done with Netflix. Sooooo done!