( Spun off from my previous post. Hat tip to diveintothemark. )

I messed up. I owe you an explanation.

“I’m going to continue to confuse a great business pivot (Netflix streaming) with a small business mistake (hamfisted way we bundled a streaming subscription separation with a price increase), and then compound it with a terrible business decision (splitting a company in two).”

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.

“I’m shocked some of you didn’t like the shit sandwich I gave you…”

Let me explain what we are doing.

“…So I’m going to take a bigger crap on it and give it back.”

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

“Now I’m going to make up some bullshit analogies to distract from the real reasons. Hey, did you notice how I referred to AOL ‘dialup’ when you and I know I really mean AOL, the entire company? Heck, they should renamed themselves Huff-O-LOL!”

So here is what we are doing and why.

“Double the Benjamins, only half the tedious bullshit of running a business.”

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.

“Like you, I stopped with the rentals when I found that every title we can’t stream can be downloaded in an hour using BitTorrent.”

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.

“I got Apple to let me put out the Netflix App with nary a peep from them because they thought my main business was going to be this archaic DVD-by-mail. Heck, I even got them to bundle my shit into their Apple TV and do all the work. Amazon and Conde Nast can eat my farts! Lolz!”

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.

“I want to play with the cool new toy. DVDs-by-Mail was a pain in the ass. I’m going to spin it off into some worthless business that is going to die.”

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.

“I picked a name that sounds like it came from 1999 so you know where Qwikster is going to be long before the next 10 years are up.”

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.

“Can you imagine telling your friends that ‘I’m using Qwikster?’ You might as well be saying, ‘In my day, we got DVDs by mail and WE LIKED IT!’”

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.

“We’re going to put all the money-losing ideas that we knew better than to do into Qwikster in the hope that Qwikster can take down Gamefly along with it.

A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

“You’re going to love having to rate every movie twice on two separate websites. Also, you know all those times when you went to rent something and realized you could stream it, or those times we couldn’t stream stuff and you just added it to your queue? Say ‘Buh-bye’ to that, bitches!”

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.

“Instead of punishing just the 1% of you who whined about new pricing, I’m going to punish the other 99% also with new pricing, separate billing, and a new company.”

We will let you know in a few weeks when the Qwikster.com website is up and ready.

“The rest of you, don’t look into Hulu Plus or Amazon Prime, until one of them has bought us out, K?”

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.

“The sock puppet grew on me also…right until the moment Pets.com went out of business and it became a meme for FAIL. I hope this meme for FAIL will top that.”

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.

“Fuck you, loyal customers.”

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.

“If you’ve been assigned to the Qwikster team, just know that all of us never liked you in the first place, but we couldn’t justify shitcanning you.”

Respectfully yours,

“No matter what happens, I’m rich, bitch!”

-Reed Hastings, Co-Founder and CEO, Netflix

“If you haven’t gathered it by now, this signature shows I don’t give a shit about ‘Shitster‘. Oops! I mean ‘Qwikster.’ Also, if your name is Jeff Bezos, you now know who to call for a M&A.”