• by Tanya Gazdik , September 19, 2011

Netflix is spinning off its DVD mail rental business into a new company called Qwikster, CEO Reed Hastings announced this morning in an email to subscribers. The streaming part of the business will continue to be called Netflix.

One drawback to the split is the two websites will not be integrated. Customers who subscribe to both services -- both DVDs by mail and streaming -- will access the services separately. Searches will not work across both sites. If a user can't find a movie on Netflix, he or she will have to do another search for the film on Qwikster.

"We think the separate websites (a link away from each other) will enable us to improve both faster than if they were single websites," Hastings wrote in response to comments from users, adding that the streaming and DVD queues are already "a click away" on the current site.

The upside to the announcement is more content. The newly relaunched Qwikster will have an optional upgrade for video games, setting it up to compete with other services such as Redbox and the game-only rental service Gamefly. Qwikster will offer Wii, Xbox 360 and PS3 games.--Tanya Irwin