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Published: Tuesday, 9/20/2011

Netflix to separate sites for streaming, DVDs

ASSOCIATED PRESS
Netflix’s DVD-by-mail service is to be renamed Qwikster. The online-movie-streaming business will retain the Netflix name. Netflix’s DVD-by-mail service is to be renamed Qwikster. The online-movie-streaming business will retain the Netflix name.
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NEW YORK — Netflix Inc. is separating its DVD-by-mail business from the online-movie-streaming service it sees as the future of entertainment consumption.

In announcing the changes, Chief Executive Officer Reed Hastings also apologized to subscribers for the way the company communicated its decision to split the two services, which raised prices for those who want both.

The mail order plan will be renamed Qwikster. In a few weeks, Netflix subscribers who want to get DVDs by mail will go to a separate Web site to access Qwikster. The streaming business will continue to be called Netflix.

Members who subscribe to both services will have two entries on their credit card statements. Instead of Netflix, the distinctive red envelopes that end up in customers’ mailboxes now will say Qwikster.

It’s a risky gamble. The amount of streaming content the company offers is still far less than the number of DVDs in its catalog.

And competition from Hulu, Amazon, Coinstar’s Redbox kiosks, and other services is growing. Netflix may alienate its customers further by asking them to deal with two separate Web sites and accounts instead of just one.

Mr. Hastings apologized for the way the company communicated the price changes but not for the price hike itself.

“I messed up,” the CEO wrote in a blog post and in emails sent to subscribers.

The firm faces increasing scrutiny from customers and shareholders over the decision announced in July to separate its mail order and Internet streaming services into two plans.

The change raised the prices for users who want both services by as much as 60 percent for some.

Andy Rendich, who has been working on Netflix’s DVD service for 12 years and leading it for the past four years, will be the CEO of Qwikster.

Mr. Hastings also said Netflix will add “substantial” streaming content in the next few months and gave assurances that no more pricing changes are in the works.



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