Netflix's double oops: Pricing, Qwikster

Your customers love you and your stock is flying high. What do you do? If you're Netflix in 2011, you tick off subscribers with a 60% price hike and the launch of a new business called Qwikster.

The idea of Qwikster, announced in July, was grounded in sound long-term thinking: It would be for the DVD business, while Netflix would be all about streaming, and that's where the future is. But for customers, it meant potentially dealing with two accounts, two credit card charges, and two Web sites.

The backlash was swift. More than 1 million users canceled their memberships, and Netflix shares have dropped by nearly 75% in recent months. Just one month after announcing Qwikster, Netflix abandoned the idea.

"We berate ourselves tremendously for that lack of insight because it didn't need to be that way," CEO Reed Hastings admitted recently at a conference. "But you know, in three or five years, we aren't going to remember it. It's going to be, `Did we succeed at streaming?'"

Until then, the company will have its work cut out for it. -- JP Mangalindan


@CNNMoney - Last updated December 20 2011: 1:40 PM ET
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