In response to Armin’s Netflix blog, I agree that Netflix made a bad business decision, but I think that there was more logic behind it than some would wish to admit. By splitting their services into streaming and rentals, Netflix evaluated consumer tastes and tested their preference of one service or the other. In my experience, users of Netflix prefer either streaming movies and TV shows on their computer or loaning DVDs. With consumers employing one method or the other, splitting them up seems sensical. However, splitting the services was unfavorable in my household, and I suspect many others. With a mother who prefers actual DVDs and a brother who is crazy about streaming, sacrificing one wasn’t an option in my family. So, we elected to pay two installments of $8 per month instead of the old single payment of $10. Not a tragedy from our point of view, but certainly an annoyance. I imagine that there were many families in a similar position who were not willing to pay for both services, or dropped their subscription entirely.
I see the logic behind Netflix’s decision – based on my observation that most users use one service or the other. But consumer’s unwillingness to submit to the separation of the services into two installments is understandable. Personally I enjoy the convenience of being able to stream or loan DVDs.