Interesting Insights from Netflix Founder Reed Hastings

Reed Hastings sent out an email to Netflix subscribers to help them understand the recent decision to separate the streaming business and the by-mail DVD business into two separate services. It was interesting to hear his thoughts regarding the DVD and online aspects of Netflix, and the potential impact to his company.

“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.”

And his statement of the action item and how it will affect us, his subscriber base.

“So 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. 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’.”

I have a ton of respect for Netflix, and have passively followed the company for years as well as being an avid user of the service and big fan. As a customer, I appreciate Mr. Hasting’s approach to delivering this kind of message – transparent, honest and sincere. It would be awesome if other businesses were taking note. I would really enjoy being a loyal, enthusiastic consumer of other services that would take a similar approach: cable tv, mobile service, the PC industry, electronics companies – just a few that come to mind. It just seems like they are few and far between.

Here is a video from the Reed and Andy Rendich (COO):

And the blog entry that mirrors the email I received:

Reed Hastings speaks about Netflix changes

Reed Hastings speaks about Netflix changes

Posted by Chuck Ebbets   @   19 September 2011

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