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Netflix drops plan to separate services

Less than a month after Netflix separated its DVD-by-mail and Internet streaming services, the company reversed course Monday and said it would keep the two services on a single website.

Soon after the plan was hatched, customers complained loudly that it would been more difficult to watch movies; investors hated it, too.

In the end, the company backed down.

Until recently, CEO Reed Hastings had always seemed to possess an uncanny touch. He was the David who crushed goliath Blockbuster and a visionary who foresaw the death of the DVD. But that cool, smooth operator seems to have vanished. Today, he and the company are fodder for "Saturday Night Live" skits and targets of venom on social networks.

Netflix's about-face Monday initially pleased Wall Street, rising 10 percent in the first minutes of trading. But enthusiasm waned in the afternoon, and Netflix shares settled Monday at $111.62, down nearly 5 percent.

Netflix started to resemble a different company last summer. The stock had been on a tear at more than $290 on July 12, up from $110 last year, but Hastings' miscalculations began that day when he abruptly announced Netflix was raising fees for its DVD business by as much as 60 percent.

For consumers, the timing could not have been worse. The economy remained stubbornly weak, and they had been given no warning. They took to social networks with their rants, bashing the company.

Then on Sept. 1, Netflix lobbed another grenade: It would no longer stream content from the cable channel Starz. Customers said they were paying more for less. Then came Qwikster, the new name for the DVD-by-mail service.

Netflix had 24.6 million subscribers at the end of June, but it warned last month that it expected a net 600,000 to leave by the end of September because of the price increase.

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