Sep. 19, 2011 at 2:26 PM ET
In all the Netflix news making the rounds Monday, you may have missed one important detail: the movie rental service is getting into the video game business.
Chief Executive Reed Hastings announced in a company blog post Sunday night that Netflix will be separating its streaming business from its DVD-by-mail service — which will henceforth be called Qwikster. But buried more than halfway down his post, he also revealed that Netflix will be making the leap into the video game rental business.
The streaming movie rental business is going to keep the Netflix brand name while the DVD-by-mail service will take the name Qwikster. (For more on that, read this story). And it's Qwikster that will be home to video game rentals.
"One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games," Hastings wrote on the blog. "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."
Rentals will be handled through the Qwikster.com website — which Hastings said will be a renamed version of the Netflix DVD website but with the addition of video games. And Hastings said that change will be coming in "a few weeks."
Oddly enough, Qwikster is turning out to be an appropriate name for the new DVD/video game service — seeing how the Qwikster Twitter handle is currently owned by a stoner gamer.
Certainly this move into gaming seems to make sense for Netflix. A recent Nielsen survey found that half of Netflix users were tuning into the company's streaming movie service using video game machines.
But according to MarketWatch, Janney Capital analyst Tony Wible called game rentals "inherently very risky" for a company like Netflix. He told clients in a report Monday that game disks are more expensive to acquire and have a shorter lifespan, given the focus on new releases by gamers. He also pointed out that game rentals do not typically include revenue-sharing agreements with publishers the same way that movies do.
Meanwhile, the question is, will this move into gaming be too little too late? Netflix/Qwikster will go head-to-head against Blockbuster and, more importantly, GameFly, which has been in the video game delivery business for almost a decade.
Netflix hasn’t announced a pricing structure for game rentals or revealed how many games will be available. In his blog post, Hastings only mentions that games for the Xbox 360, PlayStation 3 and Wii would be available. Meanwhile, GameFly offers game rentals for all the current home consoles as well as well as older machines such as the GameCube, PlayStation 2, Game Boy Advance and the original Xbox. And they already have more than 7,000 games to choose from.
Netflix certainly has broader name recognition when it comes to disc-delivery. But now that the video game service falls under the Qwikster brand ... well, that advantage has been shipped out the door.
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Winda Benedetti writes about games for msnbc.com. You can follow her tweets about games and other things here on Twitter or join her in the stream here on Google+. And be sure to check out the In-Game Facebook page here.