Full stream ahead for Netflix, as it launches Qwikster DVD service

It's all change for movie rental over in the US of A, with industry leader Netflix announcing a split in its distribution divisions, with the DVD-only service Qwikster being born out the ashes of a very unpopular new pricing plan.

The seeds for the split were sown back in July when Netflix announced a separate DVD only plan, which was available from $7.99 per month. It wasn't this new plan that caused the uproar though, but the fact that a combined DVD and streaming deal went from $9.99 per month, to a minimum of $15.98 a month - a 50 per cent hike for its more than 20 million subscribers.

This has led to an apology from Reed Hastings, co-founder and CEO of the company, and the new arm Qwikster going live.

"I messed up. I owe everyone an explanation," he wrote in a blog post. "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.

"For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming.

"We want to advertise the breadth of our incredible DVD offering so that as many people as possible know it still exists, and it is a great option for those who want the huge and comprehensive selection on DVD.

"The benefits of our streaming service are really quite different from the benefits of DVD by mail. We feel we need to focus on rapid improvement as streaming technology and the market evolve, without having to maintain compatibility with our DVD by mail service."

The trouble is that the splitting of the business doesn't really solve the price issue and actually causes extra hassles for customers wanting both streaming and physical media, as they'll now have to visit two websites, have two accounts and pay two different bills if they want both options.

It's obvious that Netflix is keen to focus on streaming and flex its muscles in that division in the face of stiffer competition than ever from the likes of Amazon.

And the move to pack DVD rentals into a separate box could be a sign that it is slowly killing off that arm of the business and that it doesn't want any negative financial results from the physical side affecting the Netflix brand.

UPDATE: Well that didn't last long. Netflix has now decided that they aren't going to launch the Qwikster DVD site, informing customers via their blog that only the prices are going to change, not the structure of the service: 

"It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs.

"This means no change: one website, one account, one password… in other words, no Qwikster."

So there you have it, panic over.