DVD service for Netflix will now be Qwikster (credit Qwikster.com)

To the dismay of thousands of subscribers, Netflix this summer broke up its popular monthly plan, which included unlimited streaming online as well as one DVD per month, into two separate plans charging $7.99 for each service rather than the original $9.99--an almost 60 percent increase in price. 

Unhappy customers took to the blogosphere threatening to boycott Netflix come September when the new plans would be put into effect. 

It seems those complaints were heard loud and clear by Netflix as it issued an official apology to its customers via email. 

"I messed up. I owe you an explanation," Netflix Co-Founder and CEO, Reed Hastings said. "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. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing."

Hastings goes on in the email to explain the changes were made to keep up with the DVD demands, which has a "very different cost structure, that need[s] to be marketed differently." 

The apology was accompanied by a new business strategy to rebrand the DVD service entirely to show a clear distinction between the DVD and streaming services. 

So, instead of reducing prices or offering some simple gesture of compensation for the price hike, Hastings says the company will rename the DVD rental service to "Qwikster." Make sense right?

Netflix's recent apology comes after it was reported the company lost 600,000 customers. 

From The Sacramento Bee: 

The customer backlash against the higher rates, kicking in this month, has been much harsher than Netflix Inc. anticipated. That prompted management to predict Thursday that the company -the largest U.S. video subscription service- will end September with 600,000 fewer U.S. customers than it had in June.

It will mark just the second time in 12 years that Netflix has lost subscribers from one quarter to the next. The last downturn occurred during 2007 when Netflix lost a mere 55,000 from March through June.

The current hemorrhaging exacerbated fears that Netflix is losing the magic touch that increased its stock 10-fold in the three years leading up to the company's July 12 announcement about its higher prices.

Neftlix has posted the apology and a detailed explanation of its actions. So far, the comments from the subscribers seems less than enthusiastic. 

From the Netflix Blog: 

David Isaacson writes: 

Dear Mr. Hastings: 

I just got your email, and, as a long-time customer, quite frankly found it to be offensive. And perhaps a devastating mis-calculation for your business. 

Your best customers are those like myself that use the DVD AND the streaming services. But those are the very customers that you are alienating. Now you write a letter to us in the form of an "apology"... and yet that apology masks the fact that you are making things significantly worse for us. 

Email from Netflix: 

Email from Netflix apologizing for its price change.

Reach Jacob Chung here.