[tsycho]

To anyone who reads this from the Netflix team:

I love Netflix. And so my following criticism is intended to be constructive. The email and blog post that Reed sent out today starts off well...

"I messed up. I owe everyone an explanation........I’ll try to explain how this happened."

However, after writing the above, Reed doesn't really give an explanation, and based on my colleagues' and other commenters' reactions so far, it seems to have come off as a smug non-apology. Rather than a wordy but empty-ish post, what you should have written about the overall price increases was a simple explanation at how your sourcing costs have increased. You might think that since that information is public, and geeks like us already know about it, but the majority of your customers might not be as news-savvy. And on the DVD side, explain to your customers some of the challenges that you are facing there, how they have become different from the streaming side, and why you needed to separate the businesses. (I personally don't really understand this one - the only reason I can think of for the clean separation is if you wanted the option to sell off one of the businesses later).

I believe people would have been more sympathetic had you given a simple, honest explanation of your challenges, especially after starting your post like that.

[18pfsmt]

I noted this elsewhere, but I believe it has to do with Netlfix relationships and negotiations with the content creators, and how it differs from the Qwikster model of buying discs. Qwikster requires zero relationships and negotiations with the content creators.

I can't really understand why people get so upset about these changes because I can't find the catalog size/ low cost anywhere else. If anyone knows of a better service/value, I would be interested.

[troutwine]

> I noted this elsewhere, but I believe it has to do with Netlfix relationships and negotiations with the content creators, and how it differs from the Qwikster model of buying discs. Qwikster requires zero relationships and negotiations with the content creators.

Query: why does a radically different content acquisition model necessitate or suggest a split of the company? Would it not be less troublesome to make a new internal division focused solely on the DVD side of the business?

> I can't really understand why people get so upset about these changes because I can't find the catalog size/ low cost anywhere else. If anyone knows of a better service/value, I would be interested.

That they are splitting the interface has killed my long-term interest in Netflix. I tend to search for films based on whim and have an active love of long-tail content. I tend to throw several films at a go into my queues, being little concerned about what arrives and when. Each new disk a surprise; I end up using the Instant Queue as a priority filter when searching for entertainment. After the split my use case will be destroyed--I'll be required to visit two websites, which I won't as I can't do so idly--and consuming films becomes a matter of searching my own desires and making, as it seems to me, an arbitrary choice between formats. I once did treat Netflix as a library which could be idly passed through, picking things here and there off the shelf. It's all about the movies for me; format is a tertiary concern. Once Quickster is live the library will be gone. It'll be two properties competing for my attention and making the choice of format a primary concern.

I want to watch movies, not decide how to do so. Netflix is a luxury good, not an essential service. It _has_ to be so trivial to use that one does so without a thought because any luxury good that starts to incur costs--beyond acquisition--becomes less so. Netflix has the size, but by splitting they've reduced their lead over their competitors and it is no longer possible to view them after the awful website redesign, the price increases, the non-apologies and the site split as casually luxurious as they once were.

I'm still with Netflix, but I'll jump ship as soon as a competitor gives me that effortless feeling again. Netflix used to have it, Amazon almost has it and any one of the content holders might grow a clue, start their own streaming service and have it overnight.

[wmf]

Qwikster requires zero relationships and negotiations with the content creators.

This isn't quite true BTW. Remember the 28-day window.

[18pfsmt]

Prior to Netflix offering any streaming, there was no 28-day window. The window came out of negotiations for streaming rights. So, not only is it true, the streaming piece of the business impacted the DVD-by-mail business.

[elq]

correlation != causation.

the 28-day window was solely a way to lower the cost of buying dvd's. Those savings went into buying more streaming licenses.

And the the grandparent - the dvd company isn't _required_ to work with the content creators, but it would probably be dumb for them not to.