Netflix splits DVD, streaming services

NEW YORK – Netflix Inc. is separating its DVD-by-mail business from the online movie streaming service it sees as the future of entertainment consumption.

In announcing the changes, CEO Reed Hastings also apologized to subscribers for the way the company communicated its decision to split the two services, which raised prices for those who want both.

The mail order plan will be renamed Qwikster. In a few weeks, Netflix subscribers who want to get DVDs by mail will go to a separate website to access Qwikster. The streaming business will continue to be called Netflix.

Members who subscribe to both services will have two entries on their credit card statements. Instead of Netflix, the distinctive red envelopes that end up in customers’ mailboxes will now say Qwikster.

Hastings apologized for the way the company communicated the price changes, but not for the price hike itself.

“I messed up,” Hastings wrote in a blog post Sunday night that was also emailed to subscribers.

The changes come as the company faces increasing scrutiny from customers and shareholders over the decision announced in July to separate its mail-order and Internet streaming services into two separate plans. The change raised the prices for users who want both services, by as much as 60 percent for some.

Hastings said the DVD service will be the same, “just a new name.” But customers will see an upgrade option for video game rentals on the Qwikster website.

Hastings also said Netflix will add “substantial” streaming content in the next few months and reassured that there are no more pricing changes.