[jonknee]

How does splitting them up make them each phenomenally better? Why should the customer care about Netflix's internal organization? Make the same changes, just keep the top level name and details like accounts/recommendations.

If I buy a Macbook Pro it's from Apple and if I rent a movie from the iTunes store it's from Apple... They are completely different business units internally, but to the customer it's the same company and I can use the same account for either purchase.

[bostonpete]

One theory, discussed by Bill Gurley in the post below, is that it'll put them in a better negotiating position with the studios, who were trying to get a percentage of Netflix revenues (not just the streaming revenue)...

http://abovethecrowd.com/2011/09/18/understanding-why-netfli...

[asr]

This has the ring of truth--otherwise, why not just better separate the divisions within the Netflix brand, as many (angry) commentors have suggested?

An additional possibility that occurs to me is that the movie studios' well-publicized dislike and fear of the streaming business is hurting the physical DVD business. Netflix has had to accept some pretty bad terms from studios, like delaying their availability of new releases, in part because studios see Netflix as a long-term threat. Quickster, on the other hand, should be able to build better relationships with studios precisely because they're not a threat to the studios' long-term dominance.

Basically, it's true that this is not the most customer-friendly move in the short-term, but the movie studios' strategy in the medium-term was to kill Netflix. "Continue to grow in the same direction" was not an option because the studios hated it, and this way both pieces of Netflix have at least a chance to survive.