Why Netflix Just Cut Itself in Half

There’s also this point raised by Bill Gurley today: Netflix has this whole time been paying studios for streaming rights based on its total number of streaming subscribers, including those with streaming + DVD plans that never watched a movie online. By partitioning streaming and mail-order, Netflix can hand studios a more accurate picture of how many people are downloading their content—which will hopefully mean more favorable studio deals, and more options for your queue.

I’ve been saying all day that Bill Gurley is right on this. People, who don’t understand the twisted and consumer unfriendly logic of Hollywood, can’t see why Netflix would voluntarily do this to itself. It was either cut off it’s arm or allow Hollywood to strangle it over streaming content deals.

Honestly I’m glad that Netflix has done this. It will make them a smarter and more nimble company in the long run, despite all the drama it’s creating for them in the near term.