As you may know, Netflix recently announced that its DVD-by-mail and streaming services, once available to customers together as one package, would become two separate services, and customers would have to pay more if they wanted to keep both. This was a hugely controversial move among members, but the new pricing plan went into effect at the beginning of the month.

Now, suddenly, CEO Reed Hastings has offered an apology for the way things went down. “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,” he says. “That was certainly not our intent, and I offer my sincere apology. I’ll try to explain how this happened.”

“For the past five years, my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming,” he added. “Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.”

Of course, this apology was just a prelude to another announcement that users are already trashing. The company has decided to separate the two services even further by turning the dvd-by-mail service – you know, the original Netflix – into its own company called Qwikster with Andy Rendich taking the reins as CEO. He’s been working on Netflix’s DVD offerings for 12 years.

If they were going to do this, why they changed the name of the service that everyone signed up for Netflix for to begin with, instead of the bonus service that they later added on, is beyond me. But that’s what they’ve done.

“We chose the name Qwikster because it refers to quick delivery,” says Hastings. “We will keep the name “Netflix” for streaming.”

They are adding video games (Wii, PS3, Xbox 360) to Qwikster, but users will have to go to qwikster.com to access their queues.

“A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated,” says Hastings. “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.”

At least pricing remains the same. For now.