Expect Netflix to Sell DVD Division
In addition to separating the plans, we are setting up a dedicated DVD division, led by 12-year Netflix veteran Andy Rendich, to focus on running a successful DVD by mail service in the U.S. for a long time. Andy and his team will be located nearby in San Jose, and are already planning some great improvements for the DVD service. Because we believe we can best generate profits and satisfaction by keeping DVD by mail as a division, we have no intention of selling it. In Q4, we'll also return to marketing our DVD by mail service, something we haven't done for many quarters. Our goal is to keep DVD as healthy as possible for as many years as possible.
DVD will do whatever it's going to do. We're not -- we're going to try to not hurt it, but we're not putting a lot of time and energy into doing anything particular around it . . . .
Hastings: There are no specific retention efforts, and we don't plan on marketing the DVD service. Our primary goal is to keep it stable, very high functioning to keep our operational metrics in terms of top-of-queue fulfillment; in terms of one-day turnaround, very, very high, and not to otherwise to start -- keep it running very well.
David Wells : And when we've tested DVD plans and putting more emphasis on DVD plans, there hasn't been a great take rate. So I think we get that question a lot and we have looked at it through AV testing. And there's not a large consumer adoption of those plans.
Fair enough. I have to give these guys the benefit of the doubt. I love visionaries and, without doubt, Hastings qualifies as one. I never tire of the story Hastings tells: He had an overdue movie. He was heading to the gym. Then it hit him. A company should offer a video rental membership in the same way a gym sets one price for you to work out as much as you want. That's nothing short of brilliant. And that's why Reed Hastings is rich and spends time in his backyard Jacuzzi and I do not.