Netflix CEO Reed Hastings apologized to customers late today and announced that Netflix will split its DVD and streaming video businesses and rebrand the DVD division. “In hindsight, I slid into arrogance based upon past success,” Hastings admitted in a blog post. He had to do something to win back his customers and stem his stock slide. Netflix has been under fire since it instituted a 60% price hike for its DVD and streaming video services. The change sparked a social media revolt and dropped its stock by nearly 50%. The company suffered another setback earlier this month, when Starz announced it would not be renewing its deal, which will mean Disney and Sony pictures won’t be available in 2012. “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 added.

“We realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently,” Hastings explained. “It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to Qwikster.” The new unit will be a separate entity, and offer video game rentals. Netflix has named COO Andy Rendich as Qwikster CEO. The DVD by mail service will move to in the next few weeks and feature the Qwikster logo on all of its packaging. The red envelopes, however, will remain.