Netflix nixes plans to split company


In this Oct. 1 photo, a Netflix DVD envelope and Netflix on-screen television menu are shown in Surfside, Fla. Netflix’s CEO says it’s abandoning its widely panned decision to separate its DVD-by-mail and Internet streaming accounts.

By Matt Liparota

Netflix generates more head-scratching plot twists than a cheap B-movie.

On Monday, the company said it would reverse a previously announced decision to put its DVD-by-mail and Internet streaming services on separate websites, a plan that was widely derided by Netflix subscribers.

“I actually thought [Netflix CEO Reed Hastings] was trying to sink the company,” said business instructor Stacey Short. “I thought he was a ringer.”

Netflix’s recent decision-making may harm the company’s image, Short said.

“Are they really going to lose revenue?” Short said. “Maybe, maybe not; they’re certainly going to hurt the brand image.”

Less than a month ago, Netflix said it would split the DVD rental business off to a new website, to be called Qwikster. Subscribers howled at the move, saying they saw Netflix as a destination for movies in general and didn’t want to manage two accounts.

“It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs,” Hastings said a blog post Monday.

Going back on decisions can cause customers and shareholders to question the people at the top, Short said.

“One has to wonder what the heck is going on on top of Netflix,” Short said. “The decisions being made are just weird.”

Short said this is not the first time a company has gone back on a decision.

“It reminds me of the whole ‘New Coke’ debacle,” Short said.

In the mid-80s, Coca-Cola changed its formula, debuting the product as a “new Coke.” Customer reaction was overwhelmingly negative, and Coca-Cola soon returned to the original formula. Short said it was a public relations setback that hurt Coca-Cola for three to five years.

Senior French major Dave Green said he was unhappy with the split when he heard about it, but the fact that Netflix decided against it made him happy.

“I think that’ll actually be fantastic,” Green said.

Senior finance major Laura O’Connell, who said she shares Netflix with her family in Zurich, said the split would have been a mistake because the company’s entire DVD catalog isn’t available to stream over the Internet.

Still, she said, at school she primarily utilizes the streaming feature.

“It would matter more to my parents than me,” O’Connell said.

The Associated Press contributed to this article.