Netflix CEO admits he ‘messed up,’ rebrands DVD-by-mail service as Qwikster

Netflix is rebranding its DVD-by-mail service as Qwikster, solidifying the company’s decision to divide its digital streaming and mail order services into two completely separatre entities.

CEO Reed Hastings penned a blog post that opens up with a confession and apology:

I messed up … and I offer my sincere apology.

Citing public feedback (“backlash” might be a more appropriate word), Reed acknolwedged that consumers were not pleased with the manner in which Netflix announced its separation of services—nor the price changes (AKA raises). He attempts to explain:

For the past five years, my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.

When Netflix is evolving rapidly, however, I need to be extra-communicative. This is the key thing I got wrong.

Reed admits that he “slid into arrogance” but the price increase is a necessary forward step.

Here’s what will happen now:

In a few weeks, we will rename our DVD by mail service to “Qwikster”. We will keep the name “Netflix” for streaming.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. … A negative of the renaming and separation is that the and websites will not be integrated. So if you subscribe to both services, and if you need to change your credit card or email address, you would need to do it in two places.

There are no pricing changes. Members who subscribe to both services will have two entries on their credit card statements, one for Qwikster and one for Netflix. Andy Rendich, who has been working on our DVD service for 12 years, and leading it for the last 4 years, will be the CEO of Qwikster. Andy and I made a short welcome video. … Going forward, Qwikster will continue to run the best DVD by mail service ever.

I wonder if “Qwikster” will come to Canada?

Update: Netflix has the domain, but Twitter… a fellow named Jason Castillo, who appears to be a weed-smoking Elmo, still owns this account. If Netflix wants it, Jason may soon be able to buy a lot more weed from the sale’s proceeds.