My two cents

And acknowledges the error of their ways. Finally we get to understand what’s really going on - Netflix, a now mature new media company (read: an “old” new media company if you like oxymorons) made a decision to fully separate their DVD and streaming businesses - likely to ensure the ability to invest in and grow the latter (still called “Netflix”), while benefitting from the “cash cow” status of the former (renamed “Qwikster”; until it’s fully shut down potentially). But they kicked off the price increase without any real indicators to this rationale, and the plan has been less than successful so far. Subscribers have dropped en masse, and the stock price has followed (see previous blog posts tagged #netflix).

Of course, separating the two business does come with issues — 1) subscriber information will be replicated in both - and will not talk to each other, 2) Subscribers using Netflix for streaming and Qwikster for DVDs will need to maintain queues in both places, 3) Ratings, reviews, and recommendations will also be separately created and managed - and will not integrate across the two. For subscribers who still want both solutions - this will feel clunky and hard to manage. For subscribers who choose only one or the other, the experience will be streamlined. Reed’s post conveys he still highly values the core DVD business - but the undertone is obvious - we can’t grow as fast as the market and those around us unless we focus on streaming, and if the DVD business only lives a short while longer, its an unfortunate (yet necessary) price to pay to stay relevant.

Today’s market reaction to the ‘real story’ will indicate how much damage control Netflix can muster, and if the market can forgive their recent missteps. They may not get all 19% of their stock price back, but at least 12-15% could mean they’re back in our good graces.

Today’s news update on WSJ

CEO Reed Hastings’ blog post (the spectrum of responses is telling of how torn the Netflix community is about all the changes)

# Netflix
# streaming
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1. nasnyc posted this