tl;dr: In 2011, Netflix raised prices for their combined dvd + streaming service, then shortly thereafter decided to split dvd off as a company named qwikster.

tl;dr: In 2011, Netflix raised prices for their combined dvd + streaming service, then shortly thereafter decided to split dvd off as a company named qwikster. Subscribers didn't like the price hike or the inconvenience of split companies and separate movie lists, etc. The change was walked back, but netflix lost roughly 800k subscribers (of 23.6mm in the us in april '11 [1]) or 3% and 77% of their stock price. The reporter claims this mostly happened because four key executives who had been at netflix basically from the beginning and whom the ceo Reed trusted and listened to had left the company and there was nobody left that he trusted enough to seriously consider their opinions. -------------------------- I think the reporting is interesting. I'd just assumed this whole thing was basically blunt negotiations between the studios and netflix over streaming rights, and that the studios had wanted to get paid per subscriber, whether that subscriber wanted dvds or streaming or both. Netflix can basically buy dvds and do whatever they want because of the doctrine of first sale, but if the studios don't license content they can't do a damn thing. What's also interesting is I've heard a lot of grumping about netflix from an employees' perspectives. People seem to get randomly fired. This jibes with what happened with qwikster. Reed had already started staffing qwikster up so employees that agreed to switch or had been hired basically got dicked. This lost them one of the key executives that had built dvd fulfillment and customer service. [1] http://en.wikipedia.org/wiki/Netflix http://en.wikipedia.org/wiki/Netflix