The problems and confusion for Netflix keep coming. Just weeks after the streaming video and DVD-by-mail company said it would spin off its DVD business into a new company called Qwikster Netflix has changed its mind.
Netflix (NASDAQ: NFLX) said Monday morning it has decided to keep its DVD-by-mail and online streaming services together under one company name and one Web site -- Netflix.
No more plans for Qwikster -- it was just a short-lived whim.
Netflix says it moved too fast when it decided to spin off its DVD business into the new unit named Qwikster. The move had come after Netflix saw its growth halt after controversy over an announced 60 percent price hike for unlimited streaming video and DVD-by-mail subscriptions.
We underestimated the appeal of the single web site and a single service, Steve Swasey, a Netflix spokesman, said in a telephone interview with The New York Times. He quickly added, according to the Times: We greatly underestimated it.
Netflix CEO Reed Hastings said in a statement that Netflix has brand value, while implying that Qwikster did not.
Consumers value the simplicity Netflix has always offered and we respect that. 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.
For the first time in several months, Netflix stock soared in response on the news -- up $12.97, or 11 percent, to $129.50 in pre-market trading. Netflix had been trading near a 52-week low of $107.63 after flying high near a 52-week high of $304.79 before the controversial 60 percent price hike was announced.
When Netflix said last month it was creating a new company -- Qwikster -- for its DVD-by-mail business that the company had begun with before expanding rapidly into streaming video services Hastings had apologized for how Netflix had handled the price hike. This time, Hastings said Netflix is through with price increases.
It is clear that for many of our members two Web sites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs, CEO Reed Hastings said in a Netflix blog post. While the July price change was necessary, we are now done with price changes.