Netflix adds games to DVD-by-mail service

Netflix has announced plans to split its DVD-by-mail and Internet media streaming services, spinning off its disc-based business as a stand-alone service named Qwikster. The company also announced it will add video games to its DVD service for the first time, launching Qwikster with a video games upgrade option that will let customers borrow PS3, Xbox 360, and Wii games.

In a welcome video, Qwikster's new chief executive Andy Reditch explains: "We're going to have games available as an additional charge, just like our Blu-ray [upgrade option]." There's no word on exact pricing yet, but in a post on the company blog, Netflix chief executive Reed Hastings also compares the game upgrade option to the service's existing Blu-ray upgrade option, suggesting it will cost a few extra dollars a month.

"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," writes Hastings. The Qwikster.com website will be launched in a few weeks, he says, and will be a renamed version of the Netflix DVD website, but with the addition of games; otherwise, the service will remain the same. "There are no pricing changes… You won’t have to do anything special if you subscribe to our DVD-by-mail service," says the blog post. The addition of games to Qwikster's mail-order offering puts it in competition with Blockbuster's similar movies-and-games subscription service and game rental service GameFly.

The separation of Netflix's online and offline divisions comes not long after a significant and unpopular price hike; in July, the film upped the cost of its unlimited streaming and DVD-by-mail package from $10 to $16 a month and created an $8 DVD-only option. In the same blog post in which he announces Qwikster, Hastings apologises for poor communication over that price bump and says he regrets not giving "a full justification to our members of why we are separating DVD and streaming, and charging for both."

Hastings writes that by splitting the business in two "we will be better at streaming, and we will be better at DVD by mail." By keeping the original company name for the online service, though, the company makes clear it sees its future in streaming. Qwikster, even with the addition of games, isn't talked up for its longevity: "DVD by mail may not last forever," writes Hastings, "but we want it to last as long as possible."