From: "Reed Hastings, Co-Founder and CEO of Netflix" <info@netflix.com>

Date: September 19, 2011 1:47:48 AM PDT

To:

Subject: An Explanation and Some Reflections

Dear Ryan, I messed up. I owe you an explanation. 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. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing. 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). So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do. So here is what we are doing and why. Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD. DVD is a great option for those who want the huge and comprehensive selection of movies. I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We need to focus on rapid improvement as streaming technology and the market evolves, without maintaining compatibility with our DVD by mail service. So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently. It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. 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 qwikster.com 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. Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated. There are no pricing changes (we’re done with that!). If you subscribe to both services you will have two entries on your credit card statement, one for Qwikster and one for Netflix. The total will be the same as your current charges. We will let you know in a few weeks when the Qwikster.com website is up and ready. For me the Netflix red envelope has always been a source of joy. The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you. I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly. Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions. Respectfully yours, -Reed Hastings, Co-Founder and CEO, Netflix p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments.

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So I'm at jury duty today in LA Country and they let you have a laptop and even have a free wireless connection to use. However, when you try and visit certain sites, including Twitter, you get denied. This seems to take the whole freedom of speech / information thing to a whole new level. Don't they realize a majority of the other potential jurors in the room have a 3G / 4G connected cell phone to post from?

So at jury duty in LA county they let you have WiFi and internet access while waiting to be called; however, they have blocked a number of sites, including Twitter. Don't they realize how many people in the room have a 3G / 4G enabled smartphone and can still access these services?

Digg recently released a new version of it's site. Users are immediately asked upon sign in to import Facebook, Twitter, and Google friends. We've got 25,000+ Twitter followers at AudioMicro and Digg keeps throwing a this 404 error. The site's homepage presently can't be accessed. I'm sure they'll get it up and running soon, but for the time being it looks like the migration has not gone as smoothly as planned.

Leaked images of the new iPod touch were released today. They're probably fake but nevertheless the photos show that the new device may have have both front (for Facetime "whoop dee friggin doo") and rear facing cameras. Adding a camera w/ video to the iPod touch would certainly be a huge improvement; however, just one more minor improvement would blow the iPod touch up bigger than a Michael Bay film. What's that? Adding a 3G connection. I can see tons of uses of the device (as a substitute for a Garmin / GPS for example, solely as a camera with easy upload capability, a hacked wireless hotspot, a dedicated checkin device for social media junkies, etc.) if the iPod touch could handle 3G connection for $15 to $25 per month - just like the iPad. There are so many times these days when a cell phone is just not necessary but having a 3G stream right to a killer multi-media device like an iPod touch would be a HUGE move for Apple and AT&T. By adding 3G, Apple could likely move 2x to 3x the number of iPod touches that they're presently selling.
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Blippy.com, the darling of Silicon Valley, having raised a Series B round of $11.2M just 4 months ago, seems to be going through a rough patch these days. US Traffic on the site (as measured by compete.com) has waned significantly over the past 3 months to what I would call "tiny little, barely funded startup levels". They've been live about 6 months and Blippy's traffic to date peaked in April 2010 right around the time they were caught up in a privacy leak scandal in which the full credit card number of users were found in Google's search index cache. So what will Blippy do to regain it's momentum? I'm predicting a massive display ad campaign / press circuit tour in the coming months. Regardless, the site has certainly not seemed to take off like a rocket. Perhaps people really don't want to share their credit card transactions publicly and that a real time stream of purchases is not going to win the social shopping space? UPDATE: This post was drafted 8/3/2010 around 2pm PST. At 5pm the same day, Blippy made a nice PR move and released a funny 404 page that got great viral coverage. These guys certainly have a great sense of humor. I guess from now on I'll have to publish posts as they are written because even a one day delay can cause your news to be old.