Netflix Splits in Two, Adds Video Games, Upsets Users Further

From PC World: Netflix’s CEO Reed Hastings thinks he has a great idea to stop more customers from defecting since its recent price hike: split his company into two operations, require users to maintain two separate accounts, and add video games. Hastings announced late Sunday that Netflix plans to rebrand its DVD by mail business as Qwikster, giving the new brand a separate website and independent viewing queue. Qwikster will also expand into video game rentals for Nintendo Wii, Sony PlayStation 3 and Xbox 360. Hastings named Andy Rendich, who currently heads up the Netflix DVD service, as Qwikster CEO.

Netflix, meanwhile, will move to a video streaming only service with aspirations of becoming a global business, according to Hastings. There will be no price hike with the changes, but it does mean that anyone paying for both DVD by mail and Netflix streaming, will now have to maintain two separate accounts, with independent order queues, movie reviews and billing services.

Hastings on the Netflix blog also offered an apology to customers who felt the company handled poorly its price hike announcement earlier this summer. In July, Netflix announced it get rid of its streaming plus unlimited DVDs option that cost $10 per month. The pricing overhaul requires users to pay $8 per month each ($16 total) for streaming and the basic unlimited DVDs plan. The new pricing came into effect for existing Netflix customers on September 1.

"Companies rarely die from moving too fast, and they frequently die from moving too slowly," Hastings said. "When Netflix is evolving rapidly, however, I need to be extra-communicative. This is the key thing I got wrong."

The move to split Netflix into two operations comes just days after the company revealed it expected to lose one million customers by the end of September. The drop in customers largely came from DVD-only account holders, although 200,000 streaming-only members have also dumped the service.

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