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Is Netflix Ready to Pull Another Qwikster?

By Rick Munarriz - Apr 24, 2013 at 5:30PM

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Netflix is moving to eliminate some aspects of its guidance relative to its DVD business. This could be the start of spinning it off on its own.

Netflix (NFLX 3.29%) may have served up blowout quarterly results, but it also seems to be ready to start dusting its DVD business under the rug. 

The leading video service operator revealed on Monday that it will stop providing guidance on subscriber expectations and projected revenue for its DVD business. It will continue to report those metrics on a quarterly basis, but the only guidance it will provide on its original mail-based platform will be in terms of contribution profit. Netflix concedes during the conference call that it's not a matter of visibility. Netflix can see pretty clearly which way its disc-based business is going. The dot-com darling merely wants to emphasize its thriving streaming business. 

The move makes sense. Netflix now has more than 36 million streaming subscribers. There are now fewer than 8 million disc-based renters. If it were to spin off its DVD business -- the way it briefly planned to do two summers ago during the Qwikster fiasco -- the move would only infuriate fewer than a quarter of its streaming customers.

Is now the right time to spin off its DVD business? Is it time to cash out of physical rentals altogether? In this video, longtime Fool contributor Rick Munarriz argues that the signs are there to suggest that Netflix wants to be seen exclusively as a streaming company.


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