Netflix and its "Qwikster" bombshell: What you need to knowYep, more changes are coming to Netflix, and this time it’s a shocker: the online movie rental giant will essentially split in two, with its streaming video service staying under the “Netflix” brand while its original DVD-by-mail business will land on a new site, called “Qwikster.”

Update: Well, never mind about Qwikster, with Netflix abruptly dropping its plan to spin off DVD rentals.

When is all this going to happen—and why is it happening? Will prices go up yet again? How is your Netflix account going to change? And whither those famous red Netflix envelopes? Get ready for some answers.

Wait—is this a joke? Netflix is really splitting off its DVD business into a separate service?
Yes, it’s real, although for a second there I thought April Fools’ Day had come six months early.

So … what’s going to happen, then? Where will I go to rent DVDs?
According to a blog post by Netflix CEO Reed Hastings, you’ll have to visit a new site at Qwikster.com that will be “the same website and DVD service that everyone is used to.” Once there, you’ll be able to manage your DVD queue and search for movies, same as before.

The one big change for Qwikster will be a new addition: game disc rentals for the Wii, PlayStation 3, and Xbox 360, which will put Netflix in competition with existing games-by-mail services like Gamefly.com.

What if I’m just on Netflix’s streaming-only plan?
Nothing much will change, according to Netflix; you’ll still go to Netflix.com to find and stream movies and TV shows, just like before. The only difference, of course, is that you’ll only see movies that are available for streaming—no more DVDs.

And for those of us who both rent DVDs and stream videos from Netflix?
In that case, you’re in for some major changes. Specifically, you’ll have to go to Netflix.com for streaming videos and Qwikster.com for DVDs by mail—and more importantly, the sites “will not be integrated” (as Netflix’s Hastings puts it), meaning you’ll have to jump back and forth between the two sites to manage your streaming-video and DVD queues, search for videos to rent, and rate movies and TV shows.

How is billing going to work? Will I have two different accounts?
Yep, says Netflix: “If you subscribe to both services, and if you need to change your credit card or email address, you would need to do it in two places,” while “members who subscribe to both services will have two entries on their credit card statements, one for Qwikster and one for Netflix.”

Here’s the big question: Are prices going to go up again?
“We’re done with that,” Netflix promises (referring, of course, to its recent and unpopular price increases), pledging that those of us with separate streaming and DVD plans on Netflix and the new Qwikster site will pay a total amount that’s “the same as the current charges.”

When is all this going to happen?
We still don’t have a precise date yet, with Netflix’s Hastings saying only that “we will let you know in a few weeks when the Qwikster.com website is up and ready.”

Alright, so why is all this happening?
That’s the question of the hour. Here’s what Hastings wrote on the official Netflix blog:

Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD, plus lots of TV series. 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. DVD by mail may not last forever, but we want it to last as long as possible.

I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. 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.

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

Is this the beginning of the end for Netflix’s famous red envelopes?
Hastings swears that it isn’t, promising that “Qwikster will continue to run the best DVD by mail service ever.”

But it sure tells you something about Netflix’s priorities, what with the company keeping its streaming video service while relegating DVDs to a different brand.

So, here’s my question for you: Will you stick with Netflix and/or Qwikster once the company splits into two? Or have you had enough of all the changes?

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