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This article originally appeared in Harvard Business Review on January 26, 2012

Few companies faced bigger self-created challenges in 2011 than Netflix. Last summer the company tried to split itself in two, creating separate websites and pricing structures for its legacy DVD-by-mail business and its newer, growing streaming video service. Consumers and the media went nuts; company founder Reed Hastings was even parodied on Saturday Night Live. The company ultimately scrapped the dual-website plan but stuck with the price increase. In response, the company’s stock cratered, and some observers even wondered if the company would survive.

In fact, two new sets of data show that criticism over Netflix’s pricing moves has been overblown, and that the company is performing better than expected.


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