The New York Times is reporting that Netflix announced it was no longer going to spin off its DVD-rental service into a separate company called "Quikster."
Netflix spokesman Steve Swasey stated "We underestimated the appeal of the single web site and a single service.... we really underestimated it."
It had been speculated that Netflix's real reason for the proposed split was to secure better licensing prices from major movie studios, since the studios charge licensing based on potential audience and Netflix was having to pay licensing based on its entire subscriber base even when a movie may not have been available on both services. Now that it has abandoned the Quikster plan, I will be curious to see if Netflix has to again raise prices or whether it will be able to win better deals in the future.
