Netflix splitting DVD and streaming into two separate sites

Netflix has found itself in the news more often than not recently, and today is no exception. Netflix sent out an email to subscribers on Monday which tried to better explain the reason for separating DVD and streaming services. That email detailed that the two services would be split into two separate businesses, DVD by mail will be renamed Qwikster and streaming will maintain the Netflix name.

The email and blog post immediately start out with an apology for the confusion surrounding the price changes. Netflix CEO Reed Hastings acknowledges customer frustration and the associated plummeting stock price in the message and attempts to explain the company’s motivations to subscribers.

“I messed up. I owe you an explanation.

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.”

So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.”

Hastings indicates that DVD by mail will now be called Qwikster and that it will have its own queue. In addition there will be a upgrade option available so that users can rent video games in addition to just movies.

“Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.”

The only positive note in Hastings message is the fact that there won’t be another price change associated with this split. The prices will remain as they were once the September 1st switch happened.

“There are no pricing changes (we’re done with that!). If you subscribe to both services you will have two entries on your credit card statement, one for Qwikster and one for Netflix. The total will be the same as your current charges.”

The most difficult part about this change is that Netflix and Qwikster are going to exist as two completely separate businesses. That means, for customers who use both, two websites to visit, two queues to manage, and two bills to pay. This particular change isn’t making me feel better about the price hike, it’s making me want to deal with Netflix even less. The very idea of managing two separate queues for my streaming and disc content is frustrating.

What’s also frustrating is the price of DVD rentals. The one disc plan at Netflix costs $7.99 and that does not include Blu-ray rental. Add in Blu-ray and expect to pay $9.99 a month for a single disc. Considering the game rentals are going to be another fee on top of that price, it could push the single disc plan with Blu-ray and games to almost $15 a month. Blockbuster will give you two discs out at a time including Blu-ray and games for $14.99 a month and a single disc for $9.99 a month. It doesn’t seem worth it to stay with Netflix if you are going disc only.

Are any of you still using Netflix and plan to continue using it? How do you feel about having to manage your streaming and disc queues separately? Would you consider switching if another streaming option came to market? Let us know how you feel about this nonsense in the comments.