The key advantage of Netflix’s new model is that it will give each side of the business—the DVD side and the streaming side—flexibility to manage its service in a way that pleases its own customers. As a combined service, any move to strengthen one side of the company over the other would have been perceived negatively by one group of customers. Netflix believes that its DVD shipments will peak in 2013; after that, as fewer and fewer people subscribe to DVDs, it’s going to have to raise prices to support the physical infrastructure needed to ship out the discs. Now it will be Qwikster that will suffer the negative reaction to all future price hikes—and Netflix that will benefit from the customers getting rid of their DVD plans.
I love that all of this article’s points are based off of a book written by Clay Christensen - one of my favorite faculty members. Well done, sir.