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September 19, 2011

Netflix Apologizes to Customers, Announces New Name for DVD Mail Service

By Oliver VanDervoort, Contributing Writer

Netflix rose to the top of the video rental ranks when they decided to allow unlimited streaming right alongside their DVD by mail service. When the company decided to up the amount they charged in order to have both services, they started quite the backlash. Now Netflix is doing damage control by sending out notices to their customers underlining their thinking. Will this be enough to stem the tide of subscribers that are jumping ship?



Perhaps due to the revamped projections for third quarter earnings, Netflix took to email early Monday morning to shed some light into exactly why there was a rate change. While Reed Hastings sent out an email explaining that the company is actually going to be re-branding its DVD by mail service as “Qwikster”, there are doubts whether this measure will aid the company at all. In the email, Hastings also sent out an apology to customers and an acknowledgement that their recent moves have led to some anger.

“We realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently,” Hastings wrote, “It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to ‘Qwikster’.”

While Netflix is losing customers in North America, it is also attempting to add customers across the globe. Most recently, the company expanded into Latin America and clearly cannot afford to be hemorrhaging customers now. What the email did not cover is whether Netflix will change the pricing yet again or whether they feel as though the email apology was all the company needed to do. Netflix also recently lost Starz as a content provider. What effect driving up prices, while missing a library of content to offer have on the company long term has yet to be seen, but 2012 could be a make or break year for Netflix.






Edited by Jennifer Russell
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