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  • Netflix: Be Kind, Rewind
Technology Articles > Entertainment > Movies > Netflix: Be Kind, Rewind

After a very controversial and ill-received move to break up its streaming and DVD delivery services, Netflix has reversed its decision. Netflix, which normally prides itself on its fast-paced business practices, admits that the company was a bit hasty in making such huge changes to their service. The move came at a high cost for Netflix, losing many subscribers, without the benefit of a price increase.

Last month, Netflix announced a plan to rebrand their DVD service as separate from their streaming service. The move was made in an effort to differentiate itself from the growing number of online streaming services, such as Hulu. Netflix would be the place to go for streaming movies, and the DVDs would be offered by a company called Qwikster.

The changes were met with a lot of frustration and confusion by customers. The prices for the services would remain the same, but customers would need to create a separate account and login with Qwikster if they wanted to continue receiving DVDs in the mail. Customers with both services would also see two separate credit card charges each month.

Just a few months earlier, in July 2011, Netflix received a lot of criticism from consumers about a price hike. The company offered a lower price for users who just wanted the streaming service, but increased the price by 60 percent for those who wanted both services.

The move alienated a lot of Netflix customers, who took to Facebook and the blogosphere to voice their criticisms. The decision to rebrand the DVD service snowballed customer dissatisfaction. The reaction from consumers was hard to ignore, and Netflix's CEO decided to reverse the rebranding move, but not the price change.

According to a blog post from the CEO of Netflix, Reed Hastings, the decision was reversed in response to customer complaints. He said that it became clear that the split complicated the user experience, and so the company will be going forward as though the change never happened. Qwikster has been removed from the equation, and there will be only one website for streaming and DVDs through Netflix. Hastings also stressed that Netflix customers should not expect any more price changes any time soon.

The brief blog post by the CEO on Netflix's website fell short of an apology, and the responses were mixed. Some posted gratitude for the company's decision to do what's best for the customer. Others expressed frustration, saying the reversal was too little too late, and that they would not be returning as customers.

It is likely that the decision to ditch Qwikster was also influenced by the massive drop in Netflix stock. During September of 2011, the price of Netflix stock dropped by half. The stock is currently only a third of what it was worth in July 2011. The future of Netflix is uncertain.

They are receiving pressure from cable companies and Hollywood studios to charge more for streaming content, along with the simultaneous threat of cancellation from customers for raising prices. It will be interesting to see how one of the founding companies of the streaming content industry copes with an ever-changing market.