The DVD/Internet movie-rental company Netflix announced that it was abandoning its move to split into two businesses, following consumer outcry. Three weeks ago, CEO Reed Hastings announced plans to split its DVD-by-mail service into a separate business named Qwikster, in a move to focus on its online video-streaming service which would retain the name Neflix.

The inconvenience of such a move, combined with a 60% price hike, led to a subscriber rebellion and exodus that drove down Nexflix shares.

The split-up would have meant Qwikster would handle billing for the DVDs-by-mail service while Netflix would bill for the online viewing. The two websites would not be linked, so customers would have to visit both sites to see whether a movie is available on DVD/Blu-ray or for online viewing. Also, viewing recommendations would not be shared across sites.

In a blog, Hastings, often hailed as a visionary, wrote that "separating Qwikster would allow Netflix to better focus on providing movies and TV shows online, where consumers are increasingly watching videos." In a U-turn, the CEO said in a statement: "There is a difference between moving quickly – which Netflix has done very well for years – and moving too fast, which is what we did in this case."

“It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs,” Hastings wrote. “This means no change: one website, one account, one password in other words, no Qwikster.”

The idea of separating the business was "a total blunder, and he misread consumer intentions and interest completely," said Adam Hanft, head of consumer marketing and branding firm Hanft Projects, quoted in the Wall Street Journal.

Industry analysts suggested that vexed DVD-loving Netflix customers would migrate to competitors such as Amazon.com and Coinstar's Redbox DVD-rental kiosks.

Story filed 12.10.11