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Netflix Offers Customers Extra Disc in Holiday Promotion

Dec. 15 (Bloomberg) -- Netflix Inc., the mail-order and streaming video service, offered DVD subscribers an extra disc as a freebie in orders placed during a year-end promotion that reverses a stance against new marketing plans.

“As a gesture of thanks this holiday season, we’d like to offer you a free bonus DVD rental to supplement your DVD subscription,” the Los Gatos, California-based company said today in an e-mail to customers.

Netflix Chief Executive Officer Reed Hastings has been seeking to contain a subscriber revolt over a price increase and an aborted plan to split its streaming and DVD-by-mail businesses. The Los Gatos, California-based company put a global expansion plan on hold after predicting losses for next year.

The DVD promotion goes against the position that Hastings took Oct. 24 during a conference call with analysts. Netflix in the past focused on attracting streaming subscribers, he said.

“We don’t plan on any substantial change to it,” Hastings said then. “The focus for us is in building back our reputation and brand strength. But that’s not through grand gestures, signing some crazy content deal or doing something else.”

Netflix lost 800,000 U.S. subscribers in the third quarter, the company reported on Oct. 24. Hastings reiterated at a conference Dec. 6 that “we’re not putting a lot of time and energy” into the DVD business. He declined at the time to comment on fourth-quarter subscriber trends, while predicting gains in 2012.

A Netflix spokesman, Steve Swasey, said it was the first time the company offered a bonus disc to all its DVD customers. He declined to reveal how much the promotion might cost.

“We thought it was a good thing to do but don’t think it falls into the ‘grand gestures’ category,” Swasey said in an interview. “It’s not a big promotion but it’s part of our step-by-step, brick-by-brick plan of rebuilding loyalty.”

Netflix fell 1.9 percent to $69.72 at the close in New York. The stock has lost 60 percent this year.

To contact the reporter on this story: Cliff Edwards in San Francisco at

To contact the editor responsible for this story: Anthony Palazzo at

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