<story><title>Reed Hastings responds to criticisms and announces Qwikster</title><url>http://blog.netflix.com/2011/09/explanation-and-some-reflections.html</url></story><parent_chain><item><author>DevX101</author><text>Netflix should be able to walk and chew gum at the same time.  There are a lot of successful companies that are much more diversified than Netflix is right now.  This honestly strikes me as a panic driven move in response to the customer rage and their precipitous drop off in stock prices.&lt;p&gt;I&apos;m trying hard but can&apos;t see the upside to this move.  And I think this will cause a big hemmorhaging in profit for the short/medium term.  Netflix has 12 million members that are on both the DVD and the streaming plan.  These are the folks that got the 60% price hike.  Although Netflix lost some customers (~5%) after the pricing change, that massive price hike put them in a position to increase profits, even with less members..&lt;p&gt;But now that Netflix is splitting itself in two, I can guarantee you a sizeable chunk of people who were just happy with the dual plan will end up picking one or the other.&lt;p&gt;That being said, I like that they&apos;re tackling video games.  They ought to take a serious look at getting into competition with Steam, which is making $1Billion in revenue and growing, with high profit margins.</text></item></parent_chain><comment><author>sriramk</author><text>If you think something of this scale was put together in a month, you don&apos;t understand how large companies work. This has to be in the works for atleast 4-5 months. The press likes to construct these action-&amp;#62;reaction narratives (Foo launches Bar in response to company X doing Y yesterday) but in reality, these things take time and are rarely direct responses to events.</text></comment>
<story><title>Reed Hastings responds to criticisms and announces Qwikster</title><url>http://blog.netflix.com/2011/09/explanation-and-some-reflections.html</url></story><parent_chain><item><author>DevX101</author><text>Netflix should be able to walk and chew gum at the same time.  There are a lot of successful companies that are much more diversified than Netflix is right now.  This honestly strikes me as a panic driven move in response to the customer rage and their precipitous drop off in stock prices.&lt;p&gt;I&apos;m trying hard but can&apos;t see the upside to this move.  And I think this will cause a big hemmorhaging in profit for the short/medium term.  Netflix has 12 million members that are on both the DVD and the streaming plan.  These are the folks that got the 60% price hike.  Although Netflix lost some customers (~5%) after the pricing change, that massive price hike put them in a position to increase profits, even with less members..&lt;p&gt;But now that Netflix is splitting itself in two, I can guarantee you a sizeable chunk of people who were just happy with the dual plan will end up picking one or the other.&lt;p&gt;That being said, I like that they&apos;re tackling video games.  They ought to take a serious look at getting into competition with Steam, which is making $1Billion in revenue and growing, with high profit margins.</text></item></parent_chain><comment><author>0x12</author><text>&amp;#62; I can guarantee you a sizeable chunk of people who were just happy with the dual plan will end up picking one or the other.&lt;p&gt;But the upside for netflix is those people that end up picking both.&lt;p&gt;The time to analyze this is 6 months from now when the figures are in.&lt;p&gt;My personal best guess about what they&apos;re about to do is sell off the DVD division.</text></comment>