Netflix Abandons Qwikster

In a blog post, Netflix Chief Executive Reed Hastings accepted the company's latest blunder in attempting to spin off its DVD-rental service into a website called Qwikster, separate from its streaming-video service.

“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. That was certainly not our intent, and I offer my sincere apology,” Hastings said.

Hastings announced the original plan on Netflix’s blog last month, writing that the company was putting its DVD service on a different website and naming Qwikster as a way to differentiate it from its growing online streaming offerings. As a result, Netflix would raise the price of its subscription plan from $9.99 a month to $15.98 a month.

The move would have forced customers of both streaming and DVD options to visit different websites and maintain different accounts for each subscription. Customers also would have received separate credit-card charges.

Although members responded in outrage, Netflix saw this as a good business move, according to Hastings. “Most companies that are great at something do not become great at new things people want because they are afraid to hurt their initial business,” he said. “Companies rarely die from moving too fast, and they frequently die from moving too slowly.”

In July, Netflix reported that its second-quarter earnings rose 57 percent and shares traded at more than $300 while subscribers forecast were cut by 4 percent after it revealed the new pricing plan. However, Netflix recently gave back those gains, ending at $111.62, down 4.8 percent, on the Nasdaq.

Although Netflix was hit hard by the July price change, Hastings stopped short of an apology to consumers.

"It is clear that for many of our members, two websites would make things more difficult," Hastings offered in a 140-word blog post. "While the July price change was necessary, we are now done with price changes,” he said.

On the blog, the reaction from customers was mixed. “Now it looks like I will be staying, at least for now," one person said. But, some subscribers are still frustrated, asking for Hastings' resignation.