Reed Hastings, 3 weeks ago:
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) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly. […]
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.
Reed Hastings, today:
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.
And then, in the very next sentence:
While the July price change was necessary, we are now done with price changes.
Besides pointing out the complete change in tone and conviction between Reed’s announcement from 3 weeks ago and his announcement today, I have two questions:
After all the conviction he had 3 weeks ago about the fast yet necessary move to create Qwikster, if Reed is now admitting that it was the wrong decision, why should I believe that their current price structure is as sustainable as they say? What if the people who researched and suggested the new pricing model the same people who suggested spinning off the DVD-by-mail service?
Has a company ever gone from being so beloved by its customers to being so disliked in such a short amount of time? Sure, nobody likes price hikes, but the back-and-forth wishy washiness of Reed Hastings’ announcements have made things so much worse.
Since the July 12 announcement about the new pricing structure, Netflix stock has dropped from $297.98 to around $120. I’m almost expecting yet another blog post in a week or two with another apology of how they messed up again. Oy.