Reed Hastings was right again

About five years ago I asked Reed Hastings, Netflix’s CEO, why they didn’t also rent videogames. His answer was very clear: Netflix was in the movie business, not the DVD mailing business. While in the short term they could be missing some revenue, focus was clearly the right strategy in the long-term.

In July 2011, the company announced a new pricing model that caused a major uproar. After a couple of years, it seems that Reed Hastings was right again.

In July 2011, Netflix CEO Reed Hastings announced a new pricing model separating its streaming service from DVD-rentals. The combined subscription that had previously cost $9.99 was split into two separate plans at $7.99 each. The pricing reform was followed by public outcry over what was effectively a 60 percent price hike for subscribers of both services.

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