Netflix CEO admits ‘arrogance,’ renames disc business Qwikster


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After watching customers leave and the company’s stock price plummet, Netflix Chief Executive Reed Hastings on Sunday admitted that he had fallen victim to ‘arrogance’ and announced changes to the DVD offering.

The company’s DVD-by-mail service will get a new name, Qwikster, and add the option to order video games along with movies.


‘We chose the name Qwikster because it refers to quick delivery,’ Hastings wrote in a blog post and an email sent to subscribers. ‘We will keep the name ‘Netflix’ for streaming.’

Netflix in August announced that it would separate the pricing for online video streaming and DVDs, resulting in a hike of up to 60% for people who utilize both options. A number of customers were outraged, and last week Netflix disclosed that it is on track to lose 600,000 subscribers in the current quarter, after previously telling investors to expect that it would add 400,000.

As a result, Netflix stock fell 26% in two days, equating to a loss of $2.6 billion in market value.

In the post, Hastings defended the policy, which he said will generate more revenue and lower shipping costs so the company can spend more acquiring digital rights to movies and television series. He said the problem was in communication.

‘In hindsight, I slid into arrogance based upon past success,’ he wrote. ‘Inside Netflix I say, ‘Actions speak louder than words,’ and we should just keep improving our service.

‘But now I see that given the huge changes we have been recently making, I should have personally given a full justification to our members of why we are separating DVD and streaming, and charging for both. It wouldn’t have changed the price increase, but it would have been the right thing to do.’


A new Qwikster website will launch within a few weeks, Hastings said, separating the company’s DVD library and ordering process from the video streaming one. People who use both will have separate charges on their credit cards.

The addition of video games to Qwikster is a change of policy for Netflix after the company for years denied that it was interested in adding titles for the Wii, Playstation 3 and Xbox 360 to its DVD collection. It also puts Qwikster into competition with Gamefly, the long-standing leader in subscription video games by mail.

-- Ben Fritz


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