Monday, October 10, 2011

Netflix Finally Figures Out That They Screwed Up

Posted By on Mon, Oct 10, 2011 at 10:00 AM


After one of the biggest PR blunders since New Coke, Netflix won't be splitting their brand in two, after all:

Abandoning a break-up plan it announced last month, Netflix said Monday morning that it had decided to keep its DVD-by-mail and online streaming services together under one name and one Web site.

The company admitted that it had moved too fast when it tried to spin-off the old-fashioned DVD service into a new company called Qwikster.

“We underestimated the appeal of the single Web site and a single service,” Steve Swasey, a Netflix spokesman, said in a telephone interview. He quickly added: “We greatly underestimated it.”

Mr. Swasey said that the Netflix chief executive Reed Hastings declined an interview request. But in a statement, Mr. Hastings said, “Consumers value the simplicity Netflix has always offered and we respect that. There is a difference between moving quickly — which Netflix has done very well for years — and moving too fast, which is what we did in this case.”

Mr. Swasey declined to comment on any involvement by the Netflix board in the decision to keep the two services together. Initial reaction to the Netflix announcement was largely positive, and the company’s stock rose about 6 percent in early trading.

There's still a question of whether the whole model of mailing people DVDs is sustainable in the long term (I probably think it isn't), but the combination of some sort of physical product combined with whatever's available streaming seems to make the most sense, so splitting the two products was bound to fail. However, until the streaming version has the actual movies you're looking for, instead of a selection of films that might do instead since you're desperate and trying to entertain two children who won't sit still for five minutes unless they're constantly entertained (just as an example), splitting up the operation clearly isn't going to fly.

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