Netflix chief Reed Hastings on Sunday apologized for the manner in which his company announced recent price hikes, but also announced further changes—Netflix's streaming and DVD services will be split into two businesses and the DVD portion will be known as Qwikster.
Netflix will also add video game rentals to Qwikster.com.
The Qwikster Web site will look like the existing Netflix site, as will the red delivery envelopes, but they will bear the new Qwikster logo. Qwikster.com and Netflix.com will operate independently and monthly charges for each will show up separately on your credit card.
The new pricing structure, which went into effect on Sept 1, will remain. Access to unlimited streaming via Netflix.com will be $7.99 per month. DVD rentals via Qwikster.com will also start at $7.99 per month for one DVD at a time, and go up from there.
At this point, Qwikster.com is just a placeholder for the upcoming service. Hastings said the switchover will happen "in a few weeks." Qwikster will just be "a renamed version of the Netflix DVD Web site, but with the addition of video games. You won't have to do anything special if you subscribe to our DVD by mail service."
The video game service will be similar to Netflix's Blu-ray upgrade option, and will include 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," Hastings wrote.
Andy Rendich, who has worked on the company's DVD rental service for 12 years and leading it for the past four, will be the CEO of Qwikster; a welcome video is below.
The price changes, announced in July, sparked a user backlash that could reportedly result in a loss of approximately 1 million subscribers. Customers were irked that there was no discount for subscribing to the streaming and DVD services, and that Netflix had seemingly given no thought to those who had been loyal to Netflix since the beginning.
In a Sunday blog post, Hastings said he "slid into arrogance based on past success," and said plainly: "I messed up." Hastings said he thought Netflix had done very well without much communication from its CEO, but "this is the key thing I got wrong," he wrote.
"But now I see that given the huge changes we have been recently making, I should have personally given a full justification to our members of why we are separating DVD and streaming, and charging for both," Hastings said. "It wouldn't have changed the price increase, but it would have been the right thing to do."
Hastings acknowledged that some believe the businesses should not be split (or re-named), but "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.
"It is possible we are moving too fast—it is hard to say," Hastings continued.
Hastings promised the addition of "substantial" streaming content in the next few months. That's likely a needed boost after Starz said recently that it will pull its content from Netflix, effective February 2012, due to a licensing dispute.
In recent weeks, however, Netflix has expanded its streaming service to all Android devices, and launched in Latin America.
Update: Netflix framed this morning's Qwikster announcement as an apology, but the move appears to have irked subscribers even more than its recent price hikes.