Netflix is preparing to separate its DVD by mail service from its streaming video offering as part of a previously announced strategy that has met criticism as a result of price increases.
In a blog posting Sunday, Netflix CEO Reed Hastings revealed that the company planned to rename the DVD business “Qwikster" with members going to a separate website (www.qwikster.com) to select movies. Netflix also plans to add a video games option that will enable members to rent Wii, PS3 and Xbox 360 games.
Andy Rendich, who has been working on Netflix’s DVD services for the last 12 years, has been named CEO of the DVD unit.
Separating the DVD from the streaming video business has its downsides: For one thing, the Netflix and Qwikster websites won’t be integrated.
“So if you subscribe to both services, and if you need to change your credit card or email address, you would need to do it in two places," Hastings wrote. “Similarly, if you rate or review a movie on Qwikster, it doesn’t show up on Netflix, and vice versa."
Last week, Netflix lowered its guidance for the third quarter by one million subscribers after the company announced a 60 percent price increase for customers who subscribed to both the DVD and streaming services.
The price hike, which took effect Sept. 1, infuriated many Netflix customers who threatened to defect to competing services.
Hastings apologized to customers for the way in which the company communicated its decision.
“In hindsight, I slid into arrogance based upon past success. We have done very well for a long time by steadily improving our service without doing much CEO communication …," Hastings said in the blog. “But now I see that given the huge changes we have been recently making, I should have personally given a full justification to our members of why we are separating DVD and streaming, and charging for both. It wouldn’t have changed the price increase, but it would have been the right thing to do."
