After upsetting many of its customers back in July by splitting its DVD and Streaming business and charging separately for both and then revealed the new pricing plan Qwikster (and subsequently digging their grave deeper), Netflix is dropping plans for the Qwikster program.

The proposed “DVD-by-mail program” didn’t win over customers who were previously unhappy and irritated the loyal customers who would lose integration between their queues. During the planning phase, the Netflix powers-that-be announced that Netflix would start renting video games (which was probably the only upside in the entire fallout).

Netflix CEO Reed Hastings announced on the company’s official blog that Qwikster is no more. The company also reaffirmed their commitment to no more price changes (which only time will tell if this can be honored). There’s been no word on whether or not Netflix will be adding game rentals to their program in the future, but given how Blockbuster and Red Box have already adapted a gaming program, the safe bet is that we’ll see it in the coming year.

Onto the new features. PS3 will be the first device to support 5.1 surround sound on content streamed from Netflix. The rest of the new features provided by the October 18th update are as follows.

# A new user interface, including the recently added search functionality, will deliver a much richer and faster browsing experience, making it easier to find the specific titles you’re looking for or to discover new content.
# Some movies and TV shows will be viewable in 1080i resolution, offering an enhanced visual experience as more consumers adopt HDTVs.
# The amount of time to start playback will be improved.
# An increasing number of movies and TV shows will be viewable with subtitles or alternate audio tracks.

From Sony’s Playstation blog:

We’re excited to announce today that Netflix and Sony have partnered to bring you thousands of movies and TV episodes streamed instantly from Netflix to your TV via your PS3 system at no extra charge. When the application launches next month, you’ll be able to access and watch thousands of Netflix choices directly through the XMB. We think that the nearly nine million PS3 enthusiasts and 11.1 million Netflix members in the U.S. will make quite a match.

If you want to get a head start on your PS3 Netflix experience, you can sign up today at http://www.netflix.com/ps3.

Also, further in the post, more details are outlined:

Initially, watching movies instantly streamed from Netflix via the PS3 system will be enabled by a free, instant streaming Blu-ray disc that is being made available to all Netflix members. The free instant streaming disc leverages Blu-ray’s BD-Live™ technology to access the Internet and activate the Netflix user interface on the PS3 system, which must be online via Wi-Fi or Ethernet.

Netflix members simply slide the disc into their PS3 systems to reveal movies and TV episodes that can be watched instantly. These titles are conveniently organized into a variety of categories based on members’ personal preferences, popular genres, new arrivals and members’ individual instant Queues. Members can use the Netflix Web site or navigate directly on their PS3 systems to add movies and TV shows to their Queues. With the PS3 system’s Wireless Controller, members can choose a movie to watch from their instant Queues or just play directly from any of the lists. They also have the ability to read synopses and rate movies. In addition, they have the option of fast-forwarding and rewinding the video stream via the Wireless Controller.

Netflix members and PS3 system owners can now reserve a free instant streaming disc for PS3 systems by going to www.netflix.com/ps3. Upon availability, the instant streaming disc will be delivered for free by first-class mail, generally one business day after members request it.