Qwikster: Is Netflix making things worse?

After raising its prices and losing customers, the streaming and DVD-by-mail giant has announced it will split its services into two separate companies

Qwikster
(Image credit: Qwikster.com)

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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