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This move is uncomfortable but necessary. The two businesses are different at every level (supply chain, cost structure, technology, user experience, etc.), and the DVD business is on its way out over the nest 3-5 years.

Better to disrupt yourself now than wait for some upstart to do it and react.



How are they any different for the user? They both accomplish the same thing: a subscription service for watching movies.


And yet somehow Amazon manages to stream video and sell DVDs at the same time.

Heck, they sell lingerie and organic tea at the same time.


But if Amazon's DVD business, or selling organic tea, doesn't perform well in the long run, they'll still be in business. If renting DVDs or streaming movies doesn't perform for Netflix, they're out of the game.


That is a reason to diversify, not to Balkanize the organization even further.


Amazon built the company around having a million services and products. Netflix built the company around having one service, and then around having two services.


Or two methods of delivery for the same service.


They're a generic store. Netflix doesn't want to be the equipment of an online department store. They're a boutique shop that has gradually realized they have two competing interests under the same house, and would rather have two shops side by side than one.




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