Netflix subscribers woke this morning to an email from CEO Reed Hastings which begins as a heartfelt apology and quickly spirals into yet another knife in the back for the company’s beloved DVD by mail service, which is now being spun off onto its own service as -- wait for it -- Qwikster.

Once the darling of Wall Street and customers alike, Netflix appears to be doing everything they can to crash and burn these days. Aside from recent price changes that effectively double the monthly cost for users of both streaming and DVD, Netflix continues to test the patience of its customers with bizarre moves such as dropping the saved section of their streaming queues in the last week.

Based on an email from CEO Reed Hastings sent to subscribers in the wee hours of Monday morning, the company appears poised to add another death by a thousand cuts to its members, announcing that the DVD service that launched the service into the hearts and minds of consumers will be spun off and rebranded as Qwikster, while the Netflix name will continue as a streaming only enterprise.

Hastings’ email begins with the promising, “I messed up. I owe you an explanation,” but quickly spirals into more bad news for fans of the DVD by mail service.

“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,” Hastings explains. “That was certainly not our intent, and I offer my sincere apology.”

Claiming the name Qwikster was chosen “because it refers to quick delivery,” Hastings explains that the new website will launch in a few weeks, where DVD members will go to access their DVD queues and choose movies -- which sounds like a further headache for subscribers who have both DVD and streaming, since they’ll no longer have notification when a disc-only title becomes available for streaming. “A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated,” Hastings explains.

It’s not all bad news, however, as Hastings claims the company is done with pricing changes and will be adding an option for Wii, PS3 and Xbox 360 video game rentals on Qwikster, similar to the company’s current solution for Blu-ray discs.

“Both the Qwikster and Netflix teams will work hard to regain your trust,” Hastings concludes. “We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.”

Hastings has posted a longer version of his email to subscribers with a video on the company’s blog, which is also open to comments -- and those should make for an entertaining read as the news spreads.

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