Netflix continues to experiment with its business plan and annoy customers in the process. Earlier this summer, it hiked up its prices by 60 percent on the popular streaming-and-DVD-rental combo plan, provoking a projected 1 million customers to flee. Now, the company has announced it will split itself into two companies: The DVD-by-mail service will become its own entity known, oddly enough, as Qwikster, while the (clearly quicker) streaming service will still be known as Netflix. Customers who want to order DVDs will have to go to a separate Qwikster website. "Our view is with this split of the businesses, we will be better at streaming, and we will be better at DVD by mail," CEO Reed Hastings wrote in an email sent out to customers Sunday night. But, some are calling the split "risky" for a company that has already done plenty to confuse customers of late. Is it a good move?
Yes, it's smart thinking: This is "a great strategic decision," says Mark Suster at Fortune. Splitting the services into two companies will allow each company to better focus on its offerings and "charge the right prices for the right services." This is also "huge" for investors, providing them with some welcome transparency. Hastings is being smart, recognizing "the massive changes" happening in the industry and setting his companies up for the future before it's too late. "Imagine if Carol Bartz or the Yahoo! board had had Reed Hastings' clarity and boldness."
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No, it's unnecessary and annoying: "Is offering consumers two companies to boycott instead of just one really going to make things any better?" asks Seth Abramovitch at Gawker. This seems like it's just going to make things difficult and confusing; customers will now have not one but two queues to manage in order to find and recommend movies. Netflix has added "needless steps to what used to be a seamless process."
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It could have been presented to customers better: "Regarding the business separation, Hastings offered a justification in terms geared for financial analysts and investors, not customers," says Stephen Shankland at CNET. No wonder it's triggered a backlash. While it seems that in the future, Netflix hopes to cleanly spit its customer base between DVD renters and streamers, today, the businesses are linked, in at least many customers' minds. That's a problem, especially when you now have "two services that each looks half-baked" instead of one well-done cookie.
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