In a lengthy blog post over the weekend, Netflix CEO Reed Hastings apologized to his members for the lack of "respect and humility in the way [the company] announced the separation of DVD and streaming, and the price changes." Hastings explained the situation as being similar to companies such as AOL dialup and Borders bookstores attempting to branch out into new fields and failing by not focusing enough the new thing and too much on their original, initial business.
"Eventually these companies realize their error of not focusing enough on the new thing," writes Hastings, "and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly."
Hastings goes on to explain that he understands now that he should have been "extra-communicative" with Netflix members about the reasons for separating DVD and streaming and the price increases. "It wouldn't have changed the price increase," he says, "but it would have been the right thing to do."
DVD and streaming services, Hastings argues, are becoming two very different businesses with different cost structures and benefits, and the two businesses need the freedom to operate independently. As such, the DVD by mail service of Netflix has been completely separated into its own independent brand known as "Qwikster."
"We chose the name Qwikster because it refers to quick delivery," says Hastings. "We will keep the name Netflix for streaming."
Qwikster will offer the same facilities as the current Netflix DVD service, but will also launch a new account upgrade option, where subscribers will be able to rent Wii, PS3 and Xbox 360 games.
The separation of the two sides of the business into two completely independent entities means that there will be no integration between the two -- rate a movie on Qwikster and it will not show up on Netflix, for example -- and customers will receive two separate credit card charges. Hastings assures users that the total will be the same as the current charges, as the company is "done with" pricing changes. Current subscribers will also not have to change anything -- their Netflix account will automatically spawn a Qwikster account if they already make use of the DVD rental option.
"Both the Qwikster and Netflix teams will work hard to regain your trust," concludes Hastings. "We know it will not be overnight. Actions speak louder than words. But words help people to understand actions."
The changeover to the newly-divided Netflix service will launch "in a few weeks."
This article originally appeared on GamePro.com as Netflix DVD Rental Becomes Qwikster, Adds Game Rentals