NetFlix Is Splitting Into Two!?

It has turned out that Netflix has abandoned the plan, finally.

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When Huahai told me the news late last night that NetFlix is splitting into two, my first reaction was that he must be reading from Onion! After all, based all what have learned from the business school classes and information economics classes, it makes perfect sense to provide bundled services, especially when it comes to information product.

However, the news is definitely true, as further confirmed by the following letter that I received this morning.

netflix letter

I don't know about you. But like many other loyal NetFlix subscribers, I love the convenience of their streaming service and almost use it exclusively even when I have bundled unlimited DVD service. In fact, I don't even watch cabled TV anymore except for the morning news. However, when I was informed that I have to pay 60% to get both services, I dumped the DVD service without hesitation. After all, I was only watching at most one DVD per week. However, this price hack does have hurt my feeling --- it seems that they don't care about their customizes anymore when they now dominate the market.

Nevertheless, the above news has shocked me. Frankly, I don't think that this move makes much sense --- why lose the establish name and give away the convenience to the customizes to be able to combine both services and maintain one single account? It also goes again the economic of scale. It all seems to me to be a very costly move.

However, I am very excited at the news. It looks like a big move that will be written into business school text books in the near future. I am really looking forward to seeing the outcome a couple of years from now on.

More on the move can be found on their blog.

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Nice place