Amongst all the hollering going on over the merits of Netflix spinning their DVD shipping service into a separate company and whether or not the new service’s name, “Qwikster”, was pulled at random out of a hat labeled “Bad Names”, one detail isn’t quite getting the attention it deserves: Qwikster is going to do video games.

Hear that deafening whir? That’s the red alarm going off at GameFly HQ.

Reed Hastings mentions the new addition in his An Explanation And Some Reflections post so passingly that it’s almost funny:

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. 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. Other improvements will follow.

Just 63 words, tucked into 1,100+ word post almost entirely about something different — that’s all it took for Hastings to essentially declare war on a service that has managed to coast by without any real competition since 2002. For nearly a decade, Gamefly has gotten by by being the Netflix of video games — and now Netflix is stepping in to be the Netflix of video games.

While calling it an “upgrade option” similar to their Blu-Ray upgrade suggests that it’ll only cost a few extra bucks a month, Netflix/Qwikster hasn’t disclosed pricing for the video game service yet. Unless it’s significantly more than GameFly (and it presumably won’t be), though, Gamefly’s battle just got a whole lot steeper: I’ve been a subscriber to both services for years now, and Netflix’s shipping/turnover times have always dominated, hands-down.

If GameFly has any advantage in this surprise battle they’ve just found themselves thrown into, it’s the breadth of their catalog. While Netflix/Qwikster only plans to ship Xbox 360/Wii/PS3 games at launch, GameFly’s collection includes everything from the DS and the PSP to last generation of consoles.

Happy Monday, GameFly!

• GAMEFLY
• NETFLIX

GameFly rents and delivers video games to customers via post mail, following the Netflix model. For a flat monthly fee, users can rent as many games as they want and keep them for as long as they want.

GameFly does not have due dates or late fees, and includes pre-paid mail both ways.

GameFly offers top games for PS3, PS2, PSP, Xbox 360, Xbox, Wii, GameCube, DS and GBA.

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With more than 23.3 million members in the United States and Canada, Netflix, Inc. is the world’s leading Internet subscription service for enjoying movies and TV shows. For $7.99 a month, Netflix members in the U.S. can instantly watch unlimited movies and TV episodes streaming right to their TVs and computers and can receive unlimited DVDs delivered quickly to their homes. In Canada, streaming unlimited movies and TV shows from Netflix is available for $7.99 a month. There are…

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