PHILADELPHIA (CBS) – Netflix has reversed course on plans to split its DVD rental and streaming services after hearing plenty of complaints from customers.

Netflix, trying to look ahead, saw more green from instant Internet delivery than from its mail-order disk rental business, and bet on spinning the latter off to a service called Qwikster.

“They did what customers did not want, and the customers stood up, fought back, and the company backed down,” says tech analyst Jeff Kagan.

Now, subscribers won’t have to manage two services on different websites if they want both options.

But Kagan says that was just round one: many customers are still angry over price increases, and Netflix continues to feel pressure from cable on-demand, kiosk rentals like Redbox, and from online services like Hulu.

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“Unless they continue to do stupid things, they will recover,” Kagan says.  “But this is a lesson for Netflix and for every other company.  The customer is the one who wins.”

Reported by Ian Bush, KYW Newsradio 1060

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