2012 100 - Networld Media Group

On the night of Sunday, Sept. 18, 2011, Netflix cofounder
and CEO Reed Hastings sent an email to
the company’s 24.6 million subscribers that began: “I
messed up. I owe you an explanation.”
The blunder had come three months earlier when customers
who opted for the company’s DVD-by-mail
and streaming services learned that their subscription
rates would jump by as much as 60 percent if they retained
both.
Hastings’ mea culpa also included the bubbly news
that the company’s DVD-by-mail service would
henceforth be a separate entity called Qwikster, accessible
via its own website for an additional fee —
a move that drew comparisons to the launch of New
Coke from the instant Hastings clicked “send.” Hastings
was roundly mocked in the business trades and
on Saturday Night Live for his arrogant, if not outright
incompetent, disregard for his core customers. He
even neglected to acquire the @Qwikster handle on
Twitter, which was then being used by a man named
Jason Castillo, whose profile pictured the Muppet
Elmo smoking a joint. No word on whether Castillo
managed to cash in on the urgent offers to buy his
handle (“idk who to trust,” he tweeted) during his
three-week window of opportunity before Hastings
went back to the confessional to renounce Qwikster
as a non-starter. In the meantime, the company(s) had
shed 800,000 angry subscribers, and saw a 76 percent
REED HASTINGS
tumble that erased approximately $12 billion from the
company’s market value.
Hastings ended 2001 by announcing
he would take a
33-percent cut in pay, while
assuring investors that “we
are done with pricing changes.”
An SEC filing revealed that Hastings’ stock option
allowance for 2012 will be $1.5 million, half of what he
received for 2011, and his salary will remain $500,000.
In a January 2012 posting headlined “Reed Hastings:
2012’s CEO of the Year?” Rick Aristotle Munarriz of
The Motley Fool marveled that Netflix shareholders
had seen a remarkable 25 percent surge in the first
week of the new year. Munarriz speculated that shares
had bounced back following some well-deserved
tax-loss selling, and the company’s revelation that
it logged some 2 billion hours of streaming content
during the last quarter. Netflix may have received an
unexpected and counter-intuitive boost when Time
Warner announced a 56-day waiting period (double
the previous 28 days) before offering its DVDs to
rental companies at bulk discount prices. While this
will hamper the DVD-by-mail side of the business,
the same constrictions apply to its chief rivals Blockbuster
and Coinstar’s Redbox which continue to rely
primarily on physical rentals. Netflix’s emphasis on
streaming may yet put Hastings on the shortlist for
Comeback CEO of the Year.
12