Netflix ^[1] will split its video-stream and DVD-mailing services into separate companies  after losing a million customers over its pricing snafu. Consider this an ideal lesson in re-branding.

The Netflix name now has a taint to it. Thanks to that sudden price increase, we now perceive the company as untrustworthy, uncommunicative, and unconcerned with its customers. Spinning the DVD-mailing division into Qwikster will let the drama die down much more quickly. When Qwikster launches in a few weeks, some new costumers may not realize at all that Qwikster is Netflix reborn, and those folks will not have that same negative perception of Qwikster. It’s a fresh, clean beginning.

Of course Netflix CEO and Co-Founder Reed Hastings isn’t going to admit this publicly. “Our view is with this split of the businesses, we will be better at streaming, and we will be better at DVD by mail,” he wrote ^[2] on Netflix’s official blog. When Netflix’s DVD mailing division becomes Qwikster, the only change to the business model will be the addition of video games. This makes the company a bit better at DVD by mail, but the streaming business model won’t change at all. So we’re left wondering if Hastings couldn’t have come up with something more than, “We’re doing this to get better.”

Before we chalk this up as a complete Netflix victory, we must stop to wonder: What is up with that name? Qwikster’s that is.  Netflix has a certain snappy ring to it. Qwikster sounds a bit like a X-Men villian. (You know, the guy who travels really fast or something.) When you go to the trouble of rebranding, make sure your new brand can mirror the former strength of the elder title. There’s Quickster, a portable net for sports; Quixtar, the name Amway gave its Internet division; and Kwik Star is a chain of convenience stores. Even the Twitter handle for Qwikster is taken.

Read more at BusinessWeek ^[3].