Monday, October 10, 2011

Netflix Admits Mistake, Reverses Unpopular Plan

Posted By on Mon, Oct 10, 2011 at 9:33 AM

The chief executive of Netflix told his company's subscribers this morning, Whoops. Our bad.

In a stunning reversal, Netflix CEO Reed Hastings reversed his decision to separate his company's DVD rental business and online video streaming service. The company had earlier planned to put movie and television DVD rentals on a different website. The original announcement sent shares of the one-time Wall Street darling down 60 percent since July. This morning's announcement sent Netflix stock up 7 percent in early trading.

"Subscribers voted and Netflix realized the whole thing was stupid," said Charlie Wolf, a media analyst at Needham and Co. "It was an act where you didn't raise prices but you lost subscribers."

In a statement issued on its blog this morning, Hastings said, "There is a difference between moving quickly, which Netflix has done very well for years, and moving too fast, which is what we did in this case."

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