"I messed up. I owe everyone an explanation." Those were the first words in a blog posting yesterday by Reed Hastings, the CEO of Netflix in responding to the uproar by U.S. customers over the companies nearly 50% price increase in July 12th.

In addition to apologizing to its customer base, Hastings announced that Netflix will be splitting up video streaming and DVD by mail businesses into two separate companies.

Going forward, Netflix will rename its DVD by mail service to “Qwikster” and its video streaming business will continue to be known as Netflix.

The changes won't affect Canadians since the Netflix has never offered it's DVD by mail service in Canada.

Hastings says Qwikster will offer the same DVD by mail service offered by Netflix in the past but through a new URL, Qwikster.com. In addition to offering the same services, Qwikster will add a video games upgrade option, similar to Netflix upgrade option for Blu-ray, for consumers who want to rent Wii, PS3 and Xbox 360 games.

Video streaming customers will continue to access their service through the Netflix website.

Hastings says each website will be focused on just one thing (DVDs or streaming) and will not be integrated, nor will user preferences and other personal information be shared between the two companies.

The Qwikster website is expected to be up and running in a few weeks.

The total monthly cost of Qwikster and Netflix will not change. 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.

Discuss the changes in Digital Home's Internet Television discussion forum .