Netflix Spins Off DVD By Mail Service as Qwikster, Adding Game Rentals

Netflix, the DVD by mail service that killed the corner video rental store, is now Qwikster. The announcement comes as the company attempts to save its profitable streaming business from a consumer revolt.

In an email to customers apologizing for poorly explaining an earlier price increase of the DVD service, Netflix CEO Reed Hastings said Qwikster will be separate from the main company, requiring DVD-by-mail subscribers to edit their queues of movies at Qwickster.com. Additionally, customers would receive two different credit card charges, although both would total the same Netflix price announced.

In light of shedding one million subscribers, dropping to 24 million from 25 million, Hasting’s email apologized for its earlier pricing announcement, writing “many members felt it lacked respect and humility. That was certainly not our intent, and I offer my sincere apology.” However, he did say the new pricing was needed, describing the DVD-by-mail and streaming “two different businesses, with very different cost structure.”

In a bid to sweeten the otherwise sour news of a price hike, Qwikster will also begin renting video games for the Wii, PlayStation 3 and Xbox 360 consoles. The move is also seen as keeping up with rental rivals Gamefly and Redbox, both of which offer games.

For some time, Apple has mulled ideas on how to create a Netflix-like service, streaming videos, movies and music via iTunes. Spinning-off the DVD side of Netflix appears to reinforce the belief that streaming data to users is the future for media delivery.

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