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Netflix Reverses Course; Will Not Separate DVD and Online Delivery of Movies

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In a move that seems to have gone over well with investors today, Netflix said it will not separate its DVD-by-mail and online streaming services as it had previously announced back in September. "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" said Netflix CEO Reed Hastings in a Netflix blog post early this morning.

The sudden reverse course, which has Netflix stock up nearly 10% on early morning trading, comes as good news for subscribers to both services who were faced with managing two separate websites to queue DVDs and online streaming titles (the former from a website called But it certainly reeks of desperation to those looking from afar and brings into question some of Netflix CEO Reed Hastings' earlier justifications for the separation of the two services.

Hastings, in a September 18 blog post, attempted to justify the separation of the two services by saying that the different cost structures, different marketing strategies, and the need to let each entity grow and operate independently could be better addressed by the separation of the two entities. That makes sense. After all, no one expected the streaming portion of its business to take off like it did. Even the studios were somewhat caught off guard by the high demand for its catalog content causing them to raise the stakes for any future licensing agreements with Netflix.

But if those differing needs were legitimate enough to warrant separate and independent focus back then, what has changed to remove the need for that concentrated focus now? Or is this just another way of trying to appease any more customers looking to follow the lead of some million or so who voted with their feet after the previous price change took affect back in September? If the latter, there's a steep and slippery slope in instituting corporate policy change at the behest of subscribers. Then again, with "Generation Meh" growing up and gaining more leverage in the economy, maybe our traditional methods of gauging interest are changing. Perhaps Netflix is just way ahead of the ever-changing marketing game. Maybe all this flopping, waffling, and reacting to social media griping is now the way companies are run.

Either way, it's clear this whole thing has yet to completely shake out, and this most recent flip is not likely to be the last in the ever-changing world of online movie delivery. So long, Qwikster. We hardly got to know you!

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