Shares of Netflix fell nearly 5 percent Monday after the company abandoned plans for its Qwikster DVD service even before launch, marking yet another zigzag in its complex and unpopular strategy.
Although the move by Netflix seemed to be welcomed by investors in the morning, when the shares rose 6.5 percent, shares of the Los Gatos, Calif.-based entertainment provider fell $5.59, closing at $111.62.
That's about 63 percent below their all-time high set earlier this year.
The move comes only three weeks after CEO Reed Hastings, smarting from a 60 percent hike in subscriber fees, announced he would split the popular DVD and streaming media company in half.
Traditional DVD rentals were to be called Qwikster and get a new Web site while Netflix's remaining streaming media offerings would remain under the old moniker.
It is clear for many of our members two Web sites would make things more difficult, Hastings posted on a blog overnight. So we are going to keep Netflix as one place to go for streaming and DVDs.
The move comes as competition for streaming media heats up. Netflix, which faces losing the popular Starz movies from Liberty Media next quarter, will see more rivalry from online services including Apple, Amazon's Prime offering and other venues.
Since the Sept. 18 Netflix split was announced, CFO David Wells told a financial conference last month, We've ruffled a lot of feathers.