LOS GATOS, Calif., Sept. 19 (UPI) -- U.S. movie giant Netflix said it would spin its mail-service DVD business away from Internet movie streaming business because of a pricing blunder.
Netflix Chief Executive Officer Reed Hastings admitted, "I messed up," MSN Money reported.
The blunder occurred in mid-July, when Netflix ended its discount for customers signing up for both its mail-order DVD service and its Internet downloading service.
Bundling both services together formerly allowed for a discount that resulted in a monthly bill of $10. By eliminating the bundling option, Netflix effectively raised the price to $8 per month for each service or $16 per month.
The company has said customers were outraged by the move. Hastings, in an online posting wrote, "I owe everybody an explanation."
He may soon owe Securities and Exchange Commission attorneys an explanation, MSN Money said.
Since the price change in mid-July, Netflix lowered its customer subscription forecast by 1 million and its share prices have dropped 19 percent.
The fiasco highlights how difficult it is for companies to keep up with changing technology, The Wall Street Journal reported.
The company's new plan is to invent a company called Qwikster, which will take over the Netflix cornerstone business of mailing DVDs to customers homes.
That firm will be a subsidiary owned by Netflix, which will be an Internet movie streaming business.