Netflix to split DVD and streaming services

Markets Reuters

(Reuters) - Netflix Inc <NFLX.O> is separating its movie streaming business and its DVD by mail service, which will be called Qwikster, Chief Executive Reed Hastings said in a company blog post.

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Andy Rendich, who has been worked at Netflix's DVD service for 12 years, and been leading it for the last 4 years, will become the CEO of Qwikster, Hastings said.

The streaming business will retain the brand "Netflix," according to the blog post.

Netflix's move follows the company's decision to increase the monthly subscription for a joint streaming and DVD rental service by as much as 60 percent that caused an uproar among customers and bloggers. Netflix shares have fallen sharply since the price increase was announced.

"I messed up. I owe everyone an explanation," Hastings wrote in a blog post.

Hastings said streaming and DVD by mail were becoming two quite different businesses, with very different cost structures. He also added that these two businesses offered different benefits that needed to be marketed differently.

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"We need to let each grow and operate independently," Hastings said.

Hastings assured there would be no pricing changes and members who subscribe to both services would have two entries on their credit card statements, one for Qwikster and one for Netflix. The total amount would be the same as the current charges.

(Reporting by Sakthi Prasad in Bangalore. Editing by Jane Merriman)

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