Netflix CEO Reed Hastings apologized on Sunday for upsetting customers with recently introduced price hikes for its DVD rental and video streaming service. He also said the company is splitting off its DVD rental business into a new service called Qwikster, and that subscribers will be able to rent video games, too.
“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,” Mr. Hastings said. “That was certainly not our intent, and I offer my sincere apology.”
Qwikster: Netflix’s new DVD rental service. Really.
He said the company will change the DVD rental side of its business to Qwikster in the coming weeks and add Wii, PS3 and Xbox 360 game rentals to the service. The company’s on demand movie and TV show streaming service will keep the Netflix name.
The two services won’t be integrated, so customers will need to subscribe to each independently. They also won’t share a video queue, so users will have to maintain independent lists for both services.
Mr. Hastings added, “Some members will likely feel that we shouldn’t split the businesses, and that we shouldn’t rename our DVD by mail service. Our view is with this split of the businesses, we will be better at streaming, and we will be better at DVD by mail.”
While the changes may be good for Netflix, Mr. Hastings is probably right that customers will be resistant. For users that subscribe to both services, they’ll have to maintain dual video lists, their ratings won’t appear for both, and they’ll need to visit two Web sites to manage their accounts.
The Qwikster name doesn’t seem to be sitting well with customers, either. Based on the lukewarm response customers are already giving the split and new name, Netflix may already be well on the way to becoming a streaming-only video service.