In an attempt to bounce back from diminishing membership and dipping stock prices, Netflix will put in place the new strategy to separate the company's DVD by mail service and the growing segment of digital on-demand streaming.
After the separation, people who subscribe to both services will have to log onto two separate Web sites, Netflix.com and Qwikster.com, to manage their movie queues and account information, the company's CEO, Reed Hastings, announced.
Web-streaming portion will continue to be called Netflix.
Members have been asking for video games for many years, and now that DVD by mail has its own team, we are finally getting it done, wrote Hastings.
In July, the company announced that it would stop bundling the streaming service for free with DVD-by-mail plans.
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, Hastings wrote.
Quikster will rent not only movies, but will feature an upgraded service that will allow the rental of videogames for the Wii, PS3 and Xbox 360.
The new company will have a separate Web site, separate queue and separate monthly charges, but the price remains the same as the current DVD-only service. Quikster will be headed by Andy Rendich, the current head of the DVD service at Netflix, who plans on keeping the iconic red envelope, albeit with a new logo.
Netflix started its subscription-based digital distribution service in 1999 and by 2009 it was offering a collection of 100,000 titles on DVD, surpassing 10 million subscribers.