Honestly, this is how a company should actually be ran.

They made a boneheaded decision, everyone called them on it, and they bailed on the decision and went back to the way things were.

Now, they should have actually sent a customer survey out before hand, but hey, they can do that next time.

But 180-degree reversals are a potential signal that the company doesn't have a coherent strategy, or that management doesn't really understand their market.

Not really a problem in a highly autonomous firm, but I'm surprised to see this in a publicly-traded company like Netflix. Seems to have have worked for them, though.

So they should just stick with a very unpopular decision? I think that when (inevitably) mistakes happen, taking one on the chin is the best option.

I'm not saying they should stick with an unpopular decision at all, just that the typical publicly-traded company would be highly likely to do so in order to avoid being perceived as incoherent or disorganized.

Netflix painted themselves into a corner here, and had no easy way out. Other companies would have chosen a different solution.

The time to make the decision was before they added streaming to Netflix. Had Netflix launched Qwikster in the first place instead of Netflix Streaming, they might be in a stronger position today.

Given Netflix's current issues with content providers I would say that their strategy does have some issues.

Well, the way a company should be run is not to screw up that badly in the first place.

Honestly, the whole episode seems like amateur hour over there in the south bay. I'd have to guess that Reed is in over his head.

Companies need to take risks, companies that are too scared of failure don't innovate and eventually die.

And a fundamental part of taking risks is sometimes you'll screw up badly, it's how you react to that that's important.

There is a difference between taking a calculated risk and acting stupidly.

I don't think it was rocket science to predict that their customers were going to walk.

This is exactly what I was trying to say.

This makes it worse. It means there wasn't an underling cause important enough to split the company. Like licencing deals or possible acquisition that couldn't be disclosed etc.

I would not doubt if they still split the company internally. They can have one website, one billing department, etc, but still have 2 internal companies. One company (probably the DVD business) just pays the other one for the services rendered (website, billing...)

This way, it is not a total reversal, just a reversal of the customer facing changes that were generally disliked.

The company has already been split internally for a long time. It's called different business units, and lots of companies do it.

Or maybe they underestimated the cost of the loss of customer goodwill the split would cause vs the cost of the "underlying cause".

Or the reasons for the split have already failed to pan out.

If the split was primarily so that they could go to Hollywood and say "No, we're just a streaming company, that DVD division is over there so just negotiate with us", I've never thought that would work. They weren't going to fool anyone.

I bet they weren't surprised by the customers walking or even the number of angry customers; I bet they discovered nobody in Hollywood was fooled and suddenly inclined to change even one letter of their contracts simply because they had "divested" their DVD product.

Changing your mind is a sign of intelligence. I can see how it would have made sense to them to separate the companies, and I think in 5 years or so, that will make sense. I hope they still do the console game rental service that was going to be a part of qwikster, although that's a dying model too.

How to make unpalatable decisions:

  1) Make two bad decisions.
  2) Go back on the first.
  3) Hope nobody notices you didn't go back on the second.
  4) Praise.

Another on-going discussion is here: http://news.ycombinator.com/item?id=3093450

sanity prevails.

I grew up with a bi-polar dad. Netflix's actions lately reminded me of that for some reason. I expect we'll find Reed Hastings sleeping naked on the front porch soon.

Shouldn't it be "Netflix reverts Qwikster split"? I don't "revert from" a misguided commit, I revert it.

I do like the metaphor though.

I always hear it as "reverting from something back to something else", but I'm not a dictionary. Then again, I should have chosen a more gripping title, anyway :). "Netflix: Qwikster is history!", "Netflix admits: We don't know what we're doing"

It's typically "revert to", since the word means "to restore to a prior state".