Greg Sandoval from CNET took a look back at the Qwikster & price hike debacle that happened a year ago (time really flies, doesn't it?). Sandoval spoke with current and former employees to get a better understanding as to what went wrong.
Once the decision to spin of the DVD business as DVD Co. (eventually Qwikster) in March was made, Hastings started separating the businesses immediately:
Some employees were stunned by how quickly and unemotionally DVD operations, the backbone of the business for a decade, was split off from the company. DVD Co. was moved out of Netflix's offices to a space a few blocks away. Netflix's leaders stopped discussing DVDs. Those Netflix executives who moved to DVD Co. stopped attending Netflix management meetings. Some of those people included Allison Hopkins, Netflix's vice president of human resources, Liz Coddington, vice president of financial planning and John Robison, vice president of DVD product development.
Few people who had worked for Netflix for any length of time were surprised that there wasn't more discussion about the plan. As Netflix's business blossomed and as he was personally applauded in the press, Hastings had grown much more confident in his own decision making, less receptive to taking advice from his senior management team. What's more, few of the people who could persuade Hastings or tell him he was making a mistake were around anymore.
Sandoval's sources suggest that Netflix CFO Barry McCarthy left over a salary dispute with Hastings (he was unhappy about a raise given to CCO Ted Sarandos):
McCarthy was livid, said the sources, and he went to Hastings to discuss his salary. The two men worked on finding a compromise but the damage was done. McCarthy handed in his resignation and within two days Hastings replaced him with David Wells, Netflix's vice president of financial planning and analysis. The same day McCarthy cleared out.
If you want to get a better understanding of what happened and what it's like to work at Netflix, you should read the entire article.
I posted here a number of times that Hastings was utterly failing to listen to the advice of Howard Schultz (founder of Starbucks) - an executive who he claimed was a key influence.
Schultz repeatedly warned in his writings not to become overconfident and arrogant and stop listening to customers and management.
Sadly, Hastings pretty followed point for point the errors Schultz made as CEO himself. Human hubris always triumphs, I guess.
Posted by: S | July 12, 2012 at 03:39 AM
Not putting any of your own direct quotes, way to stay classy Mike. Good insights though!
Posted by: Ethan | July 12, 2012 at 04:33 AM
I don't think their "lost year" is over yet. Remember when announcements about Netflix got you excited? When was the last time they announced anything of note? They are stagnant - something a subscription company cannot be.
Posted by: MattChance | July 12, 2012 at 07:52 AM
Lets just hope Reed has actually learned from his mistakes. It wasn't that long ago people were calling for Jeff Bezos to step down. You don't hear anything about him needing to step down now.
MattStance - I was excited to hear about the Weinstein deal. Getting oscar winners like Undefeated and The Artist is a pretty big deal.
Posted by: CordCutter | July 12, 2012 at 10:07 AM
What I find interesting is Netflix never advertises they have DVDs now. When they were offering streaming plus DVDs at one price, it was a big deal to have access to both.
If you're looking at the TV ads and Netflix's site, you will see no mention made of DVDs being available. I think this is partly because they want to push the $7.99 price, but there's still a strong sense of wanting the DVD service to die and early death.
I live in an area where some people are lucky to have dial-up because nothing else is available. Not their fault the infrastructure isn't there, but going streaming-only would probably cut off a lot of their die-hard customers who have few other outlets for movie viewing at home.
Posted by: Nialla | July 12, 2012 at 11:07 AM
This report proves Hastings is delusional and needs to go.
Posted by: moviegeek | July 12, 2012 at 11:45 AM
To me, a streaming-only customer from the start, the worst, most user-hostile offense that still is insufficiently appreciated was killing expiration dates beyond merely a couple of weeks out. This makes planning ahead for viewing a crap shoot. When enough people get thrown under the bus halfway through a TV series, I think the crap *really* will hit the fan!
Posted by: Schmye Bubbula | July 12, 2012 at 12:44 PM
I had never seen that SNL video. It was classic. I'll be chuckling the rest of the day! NF ain't what it once was and a few friends of mine are already talking about getting rid of it. I'm still hanging in w/ streaming only but only because I'm catching up on lots of lost TV series I didn't watch when first aired. Once I'm through those, I'll take a look at their selections again and make a decision. Oh yeah...I will stick with it for Arrested Dev. and House of Cards too. Then we'll see.
Posted by: ts | July 12, 2012 at 12:44 PM
Wait...so you're going to make sure the service has something you want before continuing to subscribe to it? It has something you want now. But if it doesn't in the future you will cancel? I've never heard of anyone making such a ridiculous decision. Seriously why wouldn't you just keep all of your services forever no matter what, that way you can always have access to them at any given second.
As far as there not being any big news. In slightly over 5 months we'll all have access to dreamworks content. So maybe Netflix should hold out on announcing their deals because clearly some of us have some issues with long term memory, oh and House of Cards and Arrested Development are in the works, as well as a second season of Lilyhammer.
Posted by: Art Artistry | July 12, 2012 at 02:56 PM
"Wait...so you're going to make sure the service has something you want before continuing to subscribe to it? It has something you want now. But if it doesn't in the future you will cancel? I've never heard of anyone making such a ridiculous decision. Seriously why wouldn't you just keep all of your services forever no matter what, that way you can always have access to them at any given second."
Ummm... you're being facetious right? I sure hope so.
Posted by: ts | July 12, 2012 at 04:57 PM
Arrogant, self-important CEO, stops listening to his own people and the customers. Shocker when things started going down the toilet. Here's a quote to consider:
"There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else."
And another:
"Listen to everyone in your company and figure out ways to get them talking. The folks on the front lines — the ones who actually talk to the customer — are the only ones who really know what's going on out there. You'd better find out what they know. This really is what total quality is all about. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your associates are trying to tell you."
I'll leave it to someone to figure out who the above quotes come from.
Posted by: MH | July 12, 2012 at 08:55 PM
Could Hastings be suffering from a Narcissistic personality disorder?
Posted by: Theodore Millon | July 13, 2012 at 02:15 PM
Fine, if Reed doesn't want to be in the disc business, I wish he'd just sell it off to someone who does, and will attempt to do it right. Because Netflix certainly isn't.
Posted by: Perkins Cobb | July 13, 2012 at 04:36 PM
he gambled on an idea. it failed. no ones saying the ceo of dish needs to go because of his ego with AMC. its a great service.
Posted by: Shanshu73 | July 14, 2012 at 08:46 PM
I keep hearing about fewer customers, but I still aint got no Hatari DVD.
Posted by: shthar | July 15, 2012 at 12:54 AM
@ Shanshu73. I agree with you "that no one is saying that the ceo of dish needs to go." That's because people know that cable/satellite companies will eventually be obsolete. People in general hate them. They've been scamming customers with their "package deals" for a long time.
This Article shows it was all Hastings back in 2011. I remember when many people on Hacking Netflix posted that he must be getting bad advise from people under him and he was too busy to know everyhting that was going on with HIS company. This article proves he knew exactly what was going on.
Netflix quit sending me e-mails (weekly) that survey me on when I mailed the disc. I've been a customer for over 8 yrs. How about ONE e-mail (survey) about your service in general?
Posted by: Wbad | July 15, 2012 at 05:28 AM