Reed explained that he hadn't meant to show a lack of "respect" to customers when he split the premium content firm's DVD and streaming offerings and set new higher prices. He said he believed it was right to separate the two businesses because one -- streaming -- is a growth business, while the DVD segment is no. He blamed himself for generating the extremely negative customer reaction. "In hindsight, I slid into arrogance based upon past success."
The DVD and streaming businesses will be split into two, at least as far as customers are concerned, with The DVD operations to be renamed Qwikster. "We chose the name Qwikster because it refers to quick delivery," Reed wrote. "We will keep the name "Netflix" for streaming.' Qwikster will add video game rentals to its DVD-by-mail service, and other "improvements" will come later, he said.
This CEO mea culpa is likely to do even less to satisfy Wall Street. On Sept. 15, Netflix revised guidance for its third quarter. The forecast for the company's subscriber base at the end of the period went from 25 million to 24 million. Netflix said its financial guidance for the quarter remained unchanged
In response, Wall Street punished Netflix shares, dropping them from $210 to $155 in two days. A blog post and a name change won't change that.