He’s recognizing that DVD is antiquated and streaming is where we are heading. Once Qwikster fails and it will, studios will have no viable other option than to offer their new release movies via streaming and Netflix then will be able to create a new streaming tier that will cost more $$ and include new release movies.

Netflix CEO Reed Hastings just dropped a bombshell. In the wake of a rapid decline in Netflix’s stock price last week, Hastings is taking a bold step by separating the DVD and video streaming services. The DVD-by-mail service will now be called Qwikster, and the streaming service will maintain the Netflix brand. That’s right: the new business (streaming) will keep the existing name.

Customers can still subscribe to both, but the two sites will not be integrated anymore. Qwikster will also now offer video game rentals through the mail, a long-requested service. With this move, Hastings is reaffirming his long-held belief that streaming is the future of Netflix and the future of entertainment, and Wall Street can judge its progress by how well the streaming business is doing on its own. Separating the businesses will also force customers to make a choice, and it is obvious which choice Hastings wants them to make (hint: it starts with an “N”). Earlier today, I wrote a post beseeching Hastings not to listen to Wall Street after his stock got hammered. You’ve got to give him credit for moving fast in the direction where he thinks the greatest opportunity lies.

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