Reed Hastings, chief executive of Netflix, published a letter on the company Web site on Sept. 18, 2011, announcing that the business will be split in two, and apologizing for the way recent changes in pricing and subscription services were handled.

"I messed up," Hastings said. "I owe everyone an explanation. It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology. I'll try to explain how this happened."

He related that the company came to see streaming and DVD-by-email as becoming two different businesses, with different structures and marketing needs.

"We need to let each grow and operate independently," added Hastings.

He announced that in a few weeks, the company will be changing its DVD-by-email service name to "Qwikster." The brand will have its own management team.

"We chose the name Qwikster because it refers to quick delivery," said Hastings. "Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. 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."

"Netflix" will remain distinctly for movie streaming. Hastings expounded on the advantages and disadvantages of the new set up.

"Another advantage of separate websites is simplicity for our members. Each website will be focused on just one thing (DVDs or streaming) and will be even easier to use. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated. So if you subscribe to both services, and if you need to change your credit card or email address, you would need to do it in two places. Similarly, if you rate or review a movie on Qwikster, it doesn't show up on Netflix, and vice-versa."

Qwikster and Netflix will now appear as separate lines on customers' credit card bills, but the price of the company's services will not change.

"There are no pricing changes (we're done with that!). Members who subscribe to both services will have two entries on their credit card statements, one for Qwikster and one for Netflix. The total will be the same as the current charges," Hasting made it clear.

The previous price changes this past summer - when the cost of a subscription that included unlimited online movie streaming plus one DVD-by-mail at a time went from $10 per month to $16 per month - has outraged customers. The company lost around 1 million of its 25 million customers, said a New York Times report.

Hastings blamed his own "arrogance based upon past success" for a failure to communicate in the face of a fast-changing business model.

"We realized we should have communicated better in July when we announced the price change," said Steve Swasey, company spokesman. "That's a mea culpa on that."