Netflix is facing a lot of heat, even AFTER Reed Hasting's (their CEO) email yesterday apologizing to the entire Netflix community about how he handled this. The wonderful world of JoyOfTech provides insider information on how this all went down. Original post here.
Sure seems to be what they were thinking. I tend to think Reed knows what he is doing, and he is fighting an uphill battle against the content companies, who keep demanding more and more and more money.
It'll be interesting to see how it shakes out.
-B