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Netflix drops DVD-only ‘Qwikster’ idea, will remain one site

By Reuters
Monday, October 10, 2011 8:28 EDT
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DVDs from Netflix. Photo: Wikimedia Commons.
 
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(Reuters) – Netflix Inc reversed an unpopular decision to put its DVD video rental business on a separate website and rename it Qwikster, saying both DVD and online streaming services will stay on the same website.

U.S. customers will continue to go to Netflix.com for streaming and DVD-by-mail rentals, the company said in a statement issued on Monday.

The earlier plan to put movie and television DVD rentals on a different website, which never went into effect, was one of several missteps in recent months that have helped drive shares of the one-time Wall Street darling down about 60 percent since July.

Writing on the company blog last month, CEO Reed Hastings said Netflix was putting the DVD service on a different website and naming it Qwikster as the company separated the business from its growing online streaming offerings.

The move would have forced customers of both streaming and DVD options to visit different websites and maintain different accounts for each subscription. Customers also would have received separate credit-card charges.

The announcement prompted confusion and outrage from customers who wrote on the Netflix blog and Facebook page, plus bewilderment over the move to the Qwikster name for DVDs sent through the mail in the company’s signature red envelopes.

In a statement issued on Monday, 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.”

“Consumers value the simplicity Netflix has always offered and we respect that,” Hastings also said.

Netflix said it will not rename the DVD service. U.S. members “will continue to use one website, one account and one password for their movie and TV watching enjoyment under the Netflix brand,” the company’s statement said.

The move comes as Netflix deals with a customer backlash that began in July when the company announced it was raising prices by as much as 60 percent, or $6 a month, for some customers who wanted to keep DVD and streaming subscriptions.

With cancellations rolling in, Netflix cut its third-quarter forecast by 1 million subscribers in September. The company said it expects to have 24 million subscribers at the quarter’s end.

Hastings later apologized for the handling of the price increase but is sticking with that decision as the company works to build its online movie and television streaming service.

Netflix faces pressure from Hollywood studios and cable programmers to pay more for streaming content. Negotiations with Liberty Media’s Starz were recently called off because the two sides could not reach an agreement on pricing terms.

The company also faces competition from Amazon.com, Hulu and others.

(Editing by Anshuman Daga)

Source: Reuters US Online Report Internet News

Creative Commons image via flickr user Laura Fries.

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