Netflix to Spin off DVD Division

This morning I, and probably many Netflix subscribers received an email from Netflix CEO Reed Hastings apologizing to their subscribers.  The apology though was a little half hearted and wasn’t apology for the way Netflix jacked up the prices on it’s users.  The apology was more for the way that they did it, without any warning and without explanation as to why.  You can read the full post on their blog here.

According to Hastings, it has been in their plans for a while to go to a stream only plan.  If you have been paying attention to Netflix, you know this to be true.  But what Hastings said is that it was going slower than expected and they wanted to refocus the busineess on streaming only.  So today they announced they will be spinning off the DVD division into a company called Qwikster.com.  Netflix will become streaming only and Qwikster will be a seperate DVD mail order business run by Andy Rendich.

This announcement comes on the heels of the price increase and loss of a deal with Starz for streaming, which has caused many users to drop Netflix all together.  As more content companies take a hard line with Netflix and pull their content, it will remain to be seen if Netflix can survive these moves.