Netflix Flip-Flop

The beleaguered Netflix, smarting from negative press and consumer complaints about separating its download and dvd rental businesses, is again doing a face-saving flip-flop. CEO Reed Hastings wrote on his blog post that “it is clear that for many of our members two websites (Netflix for downloads and Qwikster for dvd rentals) would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs. This means no change: one website, one account, one password … in other words, no Qwikster.” He says that Netflix is sticking by its decision in July to raise prices by 60% for subscribers who want to continue to both stream videos and rent DVDs, but adds that ”we are now done with price changes.” The considerable consumer backlash over the past few months has seen hich Netflix’s market value fell by 60%. The company said last month that it expected to report that its 3Q subscriptions would be about 1 Million lower than had been originally projected.

Wall Street was reassured by the announcement, which comes just as some analysts say that Netflix’s share price is low enough to consider buying again. The stock rebounded more than 7% in recent days after falling nearly 50% in the past few months.  Netflix will report its 3Q earnings on October 24. A leading economic analyst was quoted in the Wall Street Journal as saying that “today’s retreat from separating the websites shows how little testing had gone into the launch of Qwikster, we believe that the more humbled management team will be more thoughtful going forward.” Speculation is rising that the company is preparing to sell its DVD rental business and concentrate solely on the potentially more lucrative download space.

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