I think the CEO of Netflix Reed Hastings is on the right path – his strategic long term vision to separate the DVD and streaming business. Though DVDs offer a greater selection now, streaming offers more convenience and instant customer gratification. Netflix teams up with USPS to offer DVDs – now that the Postal Service itself is struggling and thinking of discontinuing Saturday service, the long term partnership does not look good. Also, the volume of postal mail declining also points to the preferences of the public – online services to snail mail. To beef up the streaming services, initially Netflix can use money generated from its DVD services and as customers migrate to its streaming services, it will come out as a winner. Customers, though angry initially, will realise the value offered by Netflix.

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