A New Site Called Grovelster – Ooops, Qwikster…

With Netflix CEO Reed Hastings doing a mea-culpa unlike many (if any) seen before, his company has actually apologized by announcing a new company, Qwikster.  The company will be a sister company of Netflix with Netflix retaining the streaming of movies component and Qwikster taking on the physical DVD distribution business.  The nice addition for the larger company is that Qwikster will also offer video games for Wii, Xbox 360 and PS3.

Everybody happy?

We won’t mention how the new company name harkens other Xsters that are now out of business. The whole chain of events is just bizarre and it seems to not be done yet.  Hastings and his team set up this well-known brand in Netflix and not only have made a complete name change for its once core service, they have made life even harder for their consumers.  While the sites are under the same umbrella company, users will need separate logins for each and the search and list functionalities will not work across both. 

There was a huge upheaval regarding the cost hike announced a few weeks ago for both delivery and streaming – causing consumers to stop using the service because of the economy (among other things) and forcing the stock price to take a hit.  And the solution is an apology and the announcement that the prices will remain elevated? And now the consumers must fiddle with separate accounts to do what they were once able to do all in one site?

Facebook has used mea-culpas as a business strategy to push the envelope and make changes – always knowing they can retreat if they cause a stir.  Have the rest of the new media players decided that they can follow suit and offer complete business changes affecting the consumers and stock holders?  Was any thought put into this? The added costs for delivery of physical and streaming and the finance issues those cause are understandable.  This should probably have taken more time to roll out.  At least Coca-Cola reverted back to the original formula when New Coke was bashed – there certainly has got to be a case study there regarding how important the thoughts of your consumers are. 

This certainly brings Groveling to the extreme and not matter how much Hastings “messed up” before, the extent of it remains to be seen.  He spoke with joy about the continuation of the beloved red envelopes with only the change to the new name.  There will probably be a huge amount of people who will be seeing a bunch more red than what is on the envelope…

[UPDATE 10/10/11] And… Its gone.  In what has been one of the most public corporate self-mutilations, Netflix announced this morning that they will NOT be spinning off the DVD business as Qwikster.  Netflix will remain as one site, one service with both streaming and DVD.  They are most definitely hoping everything will blow over.  We’ve all done things where we wish we could turn back time to right before it happened so we can stop ourselves from doing it and magically exit from the mess we’ve gotten ourselves into. Mr. Hastings is now looking for a time machine.

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