“Netflix Inc. Chief Executive Reed Hastings said in a blog post the company is separating its movie-streaming business and its DVD-by-mail service, to be renamed Qwikster, a move he said was the undisclosed impetus for a recent price increase that outraged customers and sent the company’s stock price plummeting,” Ethan Smith reports for The Wall Street Journal. ‘I messed up,’ Mr. Hastings wrote in opening his lengthy, apologetic missive posted late Sunday night on Netflix’s website. ‘I owe everyone an explanation.'”
“A Netflix spokesman said that Qwikster will be a wholly owned subsidiary of Netflix. In the blog post Mr. Hastings wrote that Andrew Rendich, who was chief service and operations officer at Netflix, will become chief executive of Qwikster,” Smith reports. “He wrote that customers will receive separate credit card statements for the two services, with the new one billed under its new name.”
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“Two months ago, Netflix said it would change its pricing structure so that its by-mail and online offerings were essentially sold separately, each starting at $8 a month. Previously customers who got movies by mail and online paid less for the combination than the offerings cost separately,” Smith reports. “The change effectively raised many subscribers’ monthly charge by 60%, to $16 from $10. Last week, in light of negative reaction to the price increases, the company cut its subscriber forecast by 1 million, or 4%. In response, Netflix’s share price plummeted 19%… ‘Inside Netflix I say, ‘Actions speak louder than words,’ and we should just keep improving our service,’ he wrote. But he added, ‘I should have personally given a full justification to our members” for the price increases.'”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Jack Frederick” for the heads up.]
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