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How much will it cost me to keep getting these in my mailbox?
How much will it cost me to keep getting these in my mailbox?

My letter from Netflix

At the top of my email queue when I turned on my laptop at about 7 yesterday morning was a note from Reed Hastings. Now I don't know anyone named Hastings, but the email was titled "An Explanation and Some Reflections," and my curiosity got the better of me. I clicked.

"Dear Damien P," was the greeting. The P, which is my middle initial, was the giveaway that this heart-to-heart chat was really computer-to-computer spin, and the next two sentences – "I messed up. I owe you an explanation." – should be read with a skeptical eye.

It turns out that Hastings is the co-founder and CEO of Netflix, which has been bleeding customers for the past couple of months since it introduced a complicated scheme of price increases involving its two products – movies delivered by DVD through the mail and movies delivered via streaming through the Internet. The announcement was handled so awkwardly, Reed was offering his "sincere apology" for the way it was done.

The company is projecting 24 million subscribers at the end of September. That's a loss of about 600,000 customers since June.

Netflix had been a Wall Street darling with a stock price that was stupidly high. That's history. The stock has lost more than half of its value in two months.

No wonder Hastings is eating humble pie.

The CEO's rambling email went on for 12 confusing paragraphs, announcing Netflix is splitting in two. One company, which will retain the brand name, will provide films only through streaming technology. A new entity, called Qwikster, will continue to deliver DVDs the old fashioned way, by snail mail.

If you want to get your movies through both mediums, as we Netflix customers have been doing, you will have to buy two separate subscriptions.

OK, I understand that streaming is the future and DVDs will eventually be as relevant as 8-track tapes. Technology changes so fast, each new content delivery system has the life of a shooting star.

Netflix knows better than anyone what happens when a corporation with an iconic brand doesn't stay in front of the curve. It ate Blockbuster's lunch.

I understand that the content providers – studios – want more money from Netflix, and the bottom line is getting squeezed.

But I keep my minimal $4.99 a month subscription to watch obscure and offbeat films and documentaries that often aren't available via streaming. I just want my red envelopes in the mail, and nobody has clearly explained what that is going to cost me.

And Reed, that name. Qwikster? It's gotta go.

How about original recipe Netflix?


boozehound | Sept. 20, 2011 at 12:43 p.m. (report)

they have no choice. movie studios are trying to bleed them dry. they're staying afloat the only way they can

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