It is pretty rare to see this type of mea culpa in the tech industry. But Netflix CEO Reed Hastings just said in a blog post that he “messed up” in how the company communicated recent price increases to customers.
The remarks come as the company announces plans to spin off its DVD mail order business under the name of Qwikster.
Meanwhile, the Netflix brand will live on for the company’s 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,” wrote Hastings. “That was certainly not our intent, and I offer my sincere apology.”
It is a fascinating read from the CEO of a publicly-traded company, and it will be interesting to see how Wall Street reacts on Monday morning. (The stock was hammered last week after Netflix announced that more people are canceling their subscriptions than anticipated).
As part of the spin off of the DVD rental business, the Qwikster brand plans to carry video game titles for the Xbox 360, Nintendo Wii and Sony PlayStation.
[GeekWire Poll: Do you accept Netflix's apology?]
Hastings says that DVD rentals and streaming video have grown apart, and that the company will be more innovative operating as two separate units. Hastings, also a Microsoft board member, writes:
“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.’”
As previously noted on GeekWire, I wouldn’t be surprised if Netflix is prepping for a sale. Splitting the company into two distinct brands could help position it to sell off either piece, something that GigaOm also thinks is possible.
Here’s Hastings taking his message to the YouTube community. Ever seen this sort of public apology before from a tech CEO?