So Netflix's Reed Hastings did an abrupt 180 today and canned the company's plans to separate the DVD-by-mail business from its streaming business. Qwixter, which produced a swifter and more effective outcry than we saw with New Coke a few decades back, is officially history before it ever began.
Netflix (NASDAQ:NFLX, news, filings) was trying to jump the gun on the natural lifecycle of tech. Their DVD-by-mail business will inevitably peak and then decline, and it will need to be managed for cash much the way Earthlink handles its residual dialup business. Meanwhile the streaming business is the future and Netflix was trying to disentangle it to set it free, metaphorically.
Unfortunately, the way they chose to do it placed the burden of the change squarely on their customers, with price hikes and two websites and places to pay instead of just the one. And those customers rebelled both with words and with their feet. I don't use Netflix, so I didn't quite realize the imposition at first.
So now what? Netflix will probably try to solve the same problem again later, but internally rather than externally. But those price hikes? They seem to remain in effect. Can't wait to hear their earnings call, I'll be sure to bring some cotton for my ears.
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