For immediate release
September 19, 2011
2:30 p.m. PST
Contact: Stuart@stuartskorman.com (415) 282-1117
FOUNDER OF REEL.COM SEEKS TO PURCHASE NETFLIX DVD BUSINESS “QUIKSTER”
Stuart Skorman believes mail order customers would be best served by a company dedicated to that business
Now that Netflix CEO Reed Hastings has split his company in two, Stuart Skorman wants to revise the DVD side. Skorman, founder of Netflix precursor Reel.com, plans to make an offer to purchase Quikster, Netflix’s new DVD business. Rather than see the DVD side remain an orphan arm of Netflix, Skorman would give it the attention it deserves, running it as a separately owned entity that is totally focused on serving the needs of mail order customers. Skorman believes that for the last four years, Netflix CEO Hastings has been almost exclusively focused on his streaming business at the expense of his DVD customers.
“The selection available from Netflix streaming is a tiny fraction of what’s available on DVD, and that selection is important to millions of customers,” Skorman says. “Like Hastings, I firmly believe that these two businesses need to be run separately, but they need to be much more separate than Hastings proposed,” Skorman says. “In his apologetic letter to customers this morning, Hastings himself confessed that companies are usually only good at one major business.”
As the founder of Internet video giant Reel.com and former owner/operator of a highly profitable chain of video stores for almost a decade, Skorman says he has both the passion and experience needed to satisfy Netflix’s DVD clientele. “For movie buffs, families and others, selection is an important part of people’s lives and they should have a company that is dedicated to their unique needs.”
Skorman had considered buying this business from Netflix for several years and plans to change both the pricing structure and availability of new releases to better meet the needs of customers. In “ala carte” fashion, he intends to make Quikster mail order very inexpensive to customers who use it infrequently or order few new releases. He will also offer new recommendation systems to add fun and value while helping customers discover movies and TV shows they’ll love.
“I’ve been very critical of Netflix’s policies toward DVD customers in my interactions with Reed Hastings and other senior executives at Netflix,” says Skorman, who recently licensed the Clerkdogs.com database to Netflix and has worked closely with its executive team. “Netflix has purposely given poor recommendations to customers to discourage demand that would make their subscription-based business model less profitable. In addition, they have used the practice of throttling or withholding DVDs from customers (see 2004 lawsuit) as well as restricted the number of shipments of new releases to customers who order too many of them.”
If Skorman has his way, the companies will soon be under separate ownership. He is contacting former and current industry executives and investors to line up financing to make the company a purchase offer and expects to give Hastings a letter of intent next week.
About Stuart Skorman
Skorman is best known for founding Reel.com he sold to Hollywood Video in 1998 for $100 million. At the time, Netflix was a small, relatively unknown company. Skorman also founded New Hampshire based Empire Video – which boasted the highest volume stores in the U.S. A serial entrepreneur, Skorman helped originate the Whole Foods Business Model as a senior executive at Bread & Circus in Boston. He also founded several companies, including HungryMinds.com, Elephant Pharmacy and Clerkdogs.com.
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