And boom goes the dynamite.

by Colin McGuire. 0 Comments

Dear Colin,

I messed up. I owe you an explanation.

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.

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). So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.

If you are a Netflix subscriber, you received an email that begun in the exact same manner as the above excerpt (without the “Colin,” obviously, unless your name is Colin, of course, in which case you probably feel a little creeped out by now). Naturally, the Associated Press offered the following headline later that day:

“Netflix says it’s sorry, then creates new uproar

Indeed. Such an email to all its customers also included the formal announcement of Qwikster, a separate service that the company will now use to provide physical DVDs to us in the mail, much in the same way Netflix, a company set to now offer nothing but streaming services, used to do.Oh, Reed Hastings, Co-Founder and CEO of Netflix. But you sounded so contrite when you used my name in the greeting!

This is … the beginning of the end for DVD services. Period. Done. That’s it. Put a fork in it. It’s clear such a move was taken with the preconceived notion in mind that eventually nobody is going to want to physically rent movies, DVDs or anything of the like and the human race will rely solely on some type of electronic box that can offer Internet-based streaming services.

But …

While the writing is on the walls with this move, and we can all rest assured the notion of “renting” something will be replaced with the notion of “streaming” something sooner than planned, it’s hard to believe the world of physical products will become extinct altogether. Example No. 1 for such an argument?

Me.

When given the option of streaming programs on my computer or having DVDs mailed to my apartment, I chose DVDs. With now facing the option of sticking with the slick and smooth Netflix brand or venturing over to the horribly named Qwikster, I have already made up my mind to opt for the latter. And while I know I’m not the most appealing person in the world, state, county, city or block, I have to think there are other people out there like me — people who simply don’t want to to sit behind a computer screen to watch a season of “The Office” if they have the option to view it in DVD format.

Remember: While we know this is clearly the future, we are still a long way from having the average person obtain the means to consistently watch Internet-streaming television without any loss of picture quality or any Web-connection issues. There are far more people who own a DVD player than who own a formidable computer, fast-Internet packages and big enough monitors to support viewing television on a watchable screen.

And then, of course, there’s this …

“We sit down at night and go through and we have a really hard time finding a movie to watch,” Michele Lucas of Denver told the Associated Press this week. She opted for the streaming-only package Netflix offered. She looked for things she knew were available via DVD. She was disappointed.

It’s true. There is a huge difference between what the company offers in DVD form and what it makes available to watch instantly (seriously — do you know how hard it is to put together those stupid Netflix Pix segments each month? It’s like looking for a buried treasure in the rain forest). And while word has it the company plans to add video games to its service, it’s no secret Netflix is going to have to noticeably amp up its catalogue if it wants to succeed.

So … what does this all mean? Well, something that I think isn’t being considered enough at this point is the following: If Netflix phases out its DVD mailing service, would that mean that all of those mom-and-pop movie rental places the company strong-armed out of business can return on some small level? I think so. Again, there are a lot of people out there — a lot of people like me — who enjoy opening a package, putting a DVD in a player and sifting through the previews and extra features. If this is only the first move in a string of actions that eventually sees Netflix’s DVD service die, why couldn’t the Movie Gallerys and Blockbusters carve out a tiny niche for their business again? It only seems logical, right?

“For me the Netflix red envelope has always been a source of joy,” Hastings wrote in that aforementioned email. “The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you. I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly. Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.”

Maybe. But if those words are just explaining actions that prove to be unpopular amongst the masses — and, even more so, when one of those words is “Qwikster” — questions about customers’ loyalty quickly begin to surface.

Or, in other words, fool me once, shame on you. Fool me twice, shame on me.

But if you fool me a third time …

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