It is a bone-headed decision from the customer perspective. No going concern would completely disregard the preferences of their client base in this manner unless there was something more compelling, such as the cost side. From CNN Money in July: "Pachter predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012." (http://money.cnn.com/2011/07/08/technology/netflix_starz_contract/index.htm).

Netflix is looking at a 10 fold increase in their licensing costs. They can't pass that on to their customers, the demand side is too price sensitive. Their former corporate structure probably restricted their ability to negotiate these fees because they couldn't differentiate the user bases, streaming from physical. The key difference with this change is that this is the only way to separate the client bases into two separate companies.

Their setting themselves up for the 2012 negotiations with the content providers. This gives the two companies additional leverage and could potentially save them $1 billion (give or take a few hundred million dollars) in the process. In the long run, it probably is the best way to serve their customers, and their shareholders.