The flip-flops continue at beleaguered Netflix. CEO Reed Hastings says today in a blog post that “It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs. This means no change: one website, one account, one password … in other words, no Qwikster.” He says that Netflix is sticking by its decision in July to raise prices by 60% for subscribers who want to continue to both stream videos and rent DVDs, but adds that ”we are now done with price changes.” The consumer backlash to that new pricing kicked off a three-month period during which Netflix’s market value fell by 60% — about $10B. The company said last month that it expected to report that its 3Q subscriptions would be about 1M lower than it had projected. Hastings hoped to stop the bleeding on Sept. 18: He apologized for the way he announced the price increase and unveiled his plan to give the weakening DVD rental business a new identity. The newly renamed Qwikster would add video game rentals to the mix and have its own CEO, Andy Rendich. “Our view is with this split of the businesses, we will be better at streaming, and we will be better at DVD by mail,” Hastings said at the time. “It is possible we are moving too fast — it is hard to say. But going forward, Qwikster will continue to run the best DVD by mail service ever, throughout the United States.” Lots of consumers, though, found the arrangement confusing, while investors wondered whether Hastings was simply preparing to sell his DVD rental business.
Wall Street was reassured by today’s announcement, which comes just as some analysts say that Netflix’s share price is low enough to consider buying again. The stock is up more than 7% in early trading. Just prior to Netflix’s announcement one of its toughest critics, Janney Capital Markets analyst Tony Wible, upgraded his recommendation to “neutral” from “sell.” He says that “Management is under immense pressure to revive interest in the stock and will likely use 3Q11 earnings to rebuild confidence any way they can, especially if they are looking to sell the company.” Netflix will report its 3Q earnings on Oct. 24. Goldman Sachs’ Ingrid Chung says that while “today’s retreat from separating the websites shows how little testing had gone into the launch of Qwikster, we believe that the more humbled management team will be more thoughtful going forward.” Lazard Capital Markets’ Barton Crockett calls the decision to drop Qwikster “clearly, a good idea” but adds that it isn’t enough to make up for the declining popularity of DVDs, and Netflix’s price hike. He adds that the company’s “very visible waffling also likely dinged domestic momentum near-term.”
Here’s today’s release about the end of Qwikster:
LOS GATOS, Calif., Oct. 10, 2011 /PRNewswire/ — Netflix, Inc. (Nasdaq: NFLX) today said it will not rename its DVD-by-mail service and that its U.S. members will continue to go to the Netflix website for both unlimited streaming and unlimited DVDs.
Netflix said in a September 18 blog post that its DVD-by-mail service would operate at Qwikster.com. Instead, U.S. members will continue to use one website, one account and one password for their movie and TV watching enjoyment under the Netflix brand.
“Consumers value the simplicity Netflix has always offered and we respect that,” said Netflix co-founder and CEO Reed Hastings. “There is a difference between moving quickly — which Netflix has done very well for years — and moving too fast, which is what we did in this case.”
Netflix today informed its U.S. members in personal emails and a post on the Netflix Blog on http://blog.netflix.com/.


Great. Because I was on the list to drop them as soon as the change was to go in effect. I might drop them anyway. Blockbuster was looking better and better in the face of all those kooky changes at Netflix. The only reason I haven’t left as yet is because I’m a film student and I need the library.
My thoughts exactly. In fact, today was the day I had scheduled to cancel DVDs by mail when I got the email from Reed. (That was so nice of him to email me personally.
I too have been looking at Blockbuster again. We’ll see what happens.
Still a member of Netflix, joined Blockbuster the other day and already like it more. The need to work a bit on the streaming situation, I think they use Roxio, and they also need to get some APPs working on the iPad etc, but they’ll get there.
i love the return-in-store situation.
-RnsW
One bad move after another…
This is too funny.
Before all of this ruckus I was blissfully unaware of what smarmy douches these guys were. It’s going to take a lot of humble customer service to win back their brand. By the way, “moving too fast” basically means “acting out of greed and arrogance.”
Sounds good. They finally saw sense.
Perhaps instead of writing blog posts they should hire one of those public relation firm thingy-mabobs.
Wow this is almost sad. Politicians can learn something from all this flip flopping.
Is this supposed to make the investor more confident and worth the risk vs. Reward?
I don’t think so.
Hey NETFLIX execs… if it’s not BROKE why are you trying to FIX it?!
Too little too late! I dumped Netflix after they decided to split last month. I switched to Blockbuster and other than waiting an extra day for the DVD’s to arrive, have had no problems. Screw you Netflix and your 60% hike. If someone were writing a book on how to destroy a business, they would need to look no further than Netflix (and the Obama administration).
Right, cause the Obama administration destroyed GM and Chrysler and…oh, wait. That’s not true. If you must babble, maybe you can babble your own reading in neutral publications and research instead of talking points fed to you by talking heads.
Fact: the number of businesses that went under was higher under Obama than under Bush (except for the last year where you can see the acceleration) but mostly due to the recession, not due to anything the administration ‘did’. Unless you think they caused the recession. Which they did not, by any measure since it started before they took office.
Fact: If the Obama administration had not taken over GM and Chrysler, over 1.3 million more jobs would have been lost. Like the President said, he didn’t want to be in the car business. No one wants drastic things like that. But if banks must be made whole (and in many ways they had to be) then we can save a million jobs. Pragmatism over ideology.
Netflix and Hstings made so many classically bad business and branding moves that it warrants several chapters as a b-school case study.
Compare Netflix confusion with Apple’s laser-focus on its marketing strategy. Hastings could learn much from the late Steve Jobs & co.
If you look at Apple’s total history you could see that Apple had its ups and downs, stock price as low as 5 bucks, and Jobs is not without mistakes either. It’s only been the last 10 years that Apple has really moved.
Good god that man’s a fool
Netflix stock has lost $200 a share since Reed’s foolish changes. Why does he still have a job? A CEO in Japan would have jumped off a building. Yet Reed’s still palling around with people at Wyoming ranches and going back on his idiot ways.
This is far too late for me. I dropped Netflix last month and I’m not missing it. They’re desperate at this point, and their customer service is still terrible. Doing Amazon Prime streaming + library is working fine for me.
Unlike my handle, actually a former Netflix customer due to price hike. We saw the streaming service as a nice add-on to the DVD service. As long as the streaming side had a meager library (pathetic really), we didn’t see it is a standalone value-add. The many technical issues didn’t make it very attractive either.
Like others who have posted on Deadline, we were cruising along blissfully unaware of other options until Netflix started fumbling the ball. With the excessive price bump, we started looking and now have put together a package that is cheaper and has access to a much broader library of content. The one downside is we have to deal with 3 distributors. Hasn’t been a real problem so Netflix’s retaining their one-stop shopping website doesn’t really improve their value proposition.
Not sure what would, if anything, win us back.
hey, can you just quickly go over the package you’ve created? I’d like to replace netflix as well and cheaper sounds great.
thanks,
Yes, please provide what you are using.
Now that Netflix has made this decision, the streaming side will suffer and that’s all I use.
I’m ready to bail.
Netflix would have been better off if they’d just let the whole thing drop. People may gave been pissed about the DVD service pricing separately from the streaming service, but they would have got over or moved on. In the long run, what Netflix is doing with separate pricing of the DVD service will be better for the company. People may think Blockbuster is a better deal, but if they spend a few months dealing with Blockbuster’s slow DVD turn-around time and poor customer service they’ll be back or they’ll go to Amazon, which is turning out to be a far better service for streaming than Netflix (at least until Netflix starts down the road of original content).
Everyone is being so melodramatic over each change. Calm down. It’s $8 a month. $16 if you’re getting DVDs as well. That’s the price of one theatre ticket plus food for access to thousands of film and television titles.
Crappy film and television titles, that is.
Yeah, and only the best films are in the theaters now and the current TV shows are better.
$22 if you’re getting two DVDs at a time.
Reed is still dropping the ball when it comes to smaller films coming out on DVD. He’s refusing to stock them anymore. Since Netflix has destroyed a majority of the small cool video stores across the county, filmmakers are screwed at reaching this audience.
So much for stoner twitter guy, @qwikster’s big payday.
Somebody at Netflix needs to get fired. Hmmmmm . . . I wonder who?
The Charles Bronson film “The Evil That Men Do” came out over two years ago but Netflix still lists it as unavailable. This is an insult to the intelligence of the customer and an example of poor quality service.
Which Netflix has no control over. The company doesn’t automatically own the rights of every film and television series ever made. These rights have to be negotiated with each and every content owner. If you’re upset about this much complain to the studio and demand they make it available for streaming.
He’s not complaining that the title isn’t available via streaming. Netflix doesn’t carry the title *at all*. It lists it as “DVD Availability Date Unknown”.
The title has been available on DVD for awhile. Netflix just figures it isn’t worth $17 for them to purchase even one copy so they can have it in their library.
Are you serious? You think Netflix has to pay $17 to purchase 1 copy of that movie, lol that isn’t how it works. They must first have a licensing agreement with the company that makes the movie and then they pay upwards of a thousand dollars depending on the title and that is if the company even wants the movie to be able to be rented because some film companies think it is better to only sell their movies and not rent them to make money off of sales. Only the movies that belong to the movie companies that Netflix already has an agreement with are put on Netflix when they are released. If someone doesn’t want to sell the rights to something then Netflix can’t buy it, that simple.
After the price hike backslash they rushed to Qwickster, now they are rushing backwards?
This ADHD decision making gives the impression they don’t know where they’re going. The plane’s pilot is blind.
Netflix looks like it’s being run by the keystone cops! But despite all the craziness and poor decision-making, it’s still a great bargain. The company has bungled the whole thing since the price change, especially the fact that they didn’t get the message out that it’s not the company being greedy, it’s the studios who are being greedy and are charging Netflix outrageous fees for streaming rights.
You’re clearly not trying very hard. And Netflix has been undercharging customers for years anyway. Add in the fact that studios have now increase their licensing costs into the billions, it means you’re finally going to have to pay the real price. Again, grow up.
Good news for me. I always thought Netflix was a bargain so I wasn’t surprised when the price hike eventually came. But I did mind that they became transparently desperate to get rid of their DVD business — at the expense of their customers. Their streaming selection of TV shows is really quite impressive, but movies, not so much.
I do hope Amazon Prime keeps growing, though, it will be nice to give Netflix a big enough competitor for Hastings to at least give pause before making more snap decisions.
OMG! HA, ha, haaaa! Sorry but seriously what is going on over there.
On the other hand, Reed Hastings now has a great future in Democratic Party political planning.
AND a chair over at MSNBC. Hope they seat him next to Al Sharpton!