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Netflix subscribers riled by company’s split

Internet, DVD services separated

Reed Hastings, Netflix chief executive, announced the plan in a blog post Sunday night. Reed Hastings, Netflix chief executive, announced the plan in a blog post Sunday night. (Felipe Caicedo/Getty Images for Netflix)
By Brian Stelter and Jenna Wortham
New York Times / September 20, 2011

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Netflix, the company that changed the way tens of millions of people watch films and TV shows, is quickly discovering that there’s a downside to having cultivated a passionate fan base.

After Reed Hastings, the company’s cofounder and chief executive, announced a plan - in a blog post and seemingly in a hurry a minute before midnight Sunday - to split Netflix into two separate businesses, one for Internet streaming and one for DVDs by mail, the company’s website was inundated with angry messages.

In many of the 17,000 comments so far, disgruntled consumers mocked the name of the new DVD company, Qwikster, and predicted its demise. They complained that they would soon have to pay for and manage two accounts. And they wondered why Hastings was apologizing for arrogance - but not for disrupting a service that they adore.

“I just got your e-mail, and, as a longtime customer, quite frankly found it to be offensive. And perhaps a devastating miscalculation for your business,’’ wrote David Isaacson, 47, of Chicago.

The lesson seems to be that all those customers who appreciate low prices, innovative products, and lightning-fast customer service can swiftly turn when they feel slighted - perhaps because they know how responsive such companies have been in the past.

Netflix was considered a high-flyer of Silicon Valley. But the company’s stock price has been hammered since it introduced an unpopular price increase - $6 more a month - for its Internet-plus-DVD service this summer.

The change has spurred about a million of its 25 million customers in the United States to drop their subscriptions.

In his blog post, Hastings suggested that the next step - breaking up the delivery systems into two separate companies - would allow each to grow and better serve customers. In an unusually personal way, he apologized for the way he handled the earlier announcement, which prompted a similar outpouring from customers. “I messed up,’’ he wrote. But that admission only seemed to increase the criticism and derision in some quarters.