The CEO is afraid of missing shifts in technology, which is fine, but many think he's gone way too far the other way.
Netflix is splitting into two. Netflix will remain as the name of the streaming-only service. The DVD service will be split off under the name Kwikster.
While the future may really be in streaming, here's the problems right now:
1: The majority of Americans don't have a broadband connection capable of supporting a streamed TV show, let alone, a movie in HD. In fact, a good portion of Americans don't even have broadband at all.
2: Netflix's streaming library is fairly small compared to their DVD library, and fairly unpredictable. They're in constant battles over rights for shows and movies. Most notably is their deal with Starz, which will expire in February of 2012. Unless this is renewed, which is looking very shaky right now, fans of Netflix's streaming service will lose access to several big studios' titles - including Disney.
3: As a streaming-only service, Netflix was a tough sell when compared to things like Hulu (free on PCs), Hulu Plus ($7/mo), HBO-To-Go, and even up and coming services from Comcast/Xfinity, DirecTV, and DishNetwork.
4: As a DVD-only service, Kwikster faces tough competition from Redbox, whose $1/disc/night price is awfully tough to beat.
The old combined Netflix service made sense. It kept the old DVD customers around while the streaming library came up to speed. At some point, yes, this split makes sense, but honestly, this isn't the time - especially in light of the recent 60% price hike in the middle of a recession.
Furthermore, the CEO's attitude about physical media in general is way off target. DVD is going to be around at least another decade, and while I doubt blu-ray will ever overtake DVD, I don't see it going away any time either.
It remains to be seen how this 2-sites, 1-company thing is going to work. Right now it sounds like customers who want both Netflix(streaming) and Kwikster(DVDs) will now see 2 separate charges on their credit cards, and will need to manage 2 separate accounts...and 2 separate queues? So does that mean if I wanted to stream a show from Netflix, only to find out it's not available, I'll have to hop over to Kwikster and add it to my queue over there? Talk about inconvenient.
At the same time, there was mention that Kwikster would be (FINALLY!) adding video games to its library. No information about pricing or what sorts of games are going to be available has been released yet. Honestly, the best move for Kwikster would be to just outright buy Gamefly.
Realistically this isn't the time to join. There's way too much shakiness right now, and at least for the meantime, there are equally good, if not better, alternatives for DVD-only or Streaming-only services. I'd wait 6 months for this split to occur and for them to shake out the inevitable bugs that are going to arise when they try to split their customer database. Trust me, you don't need the extra headaches.