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The company's decision back in July to change its pricing structure - separating its streaming and mail-order DVD service into two distinct pricing models - was not a bad idea. As I wrote back then:

"... while the new fee structure can be justified, the backlash comes more from how Netflix positioned the news. The company assumed that its satisfied customers would stay loyal. This is an assumption many companies make, equating satisfaction to loyalty, and thinking once a customer is loyal, he or she will stay loyal."

Fast forward to last week, when Netflix announced that more than 1 million customers - 4 percent of its customer base -- abandoned the company after the news of the price increase. Its stock price plummeted, and this morning the company felt compelled to take drastic action. Mr. Hastings wrote me and the other Netflix subscribers a heartfelt letter saying that the company will be divided into two groups - Netflix as it is for streaming, and Qwikster for its DVD service. According to Hastings:

"So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently."

More importantly, he apologized for how the company treated customers:

"I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly."

This admission of poor judgment may ultimately help the company turn a negative into a positive and help its long-term health. As Don Peppers and Martha Rogers, Ph.D. say, companies must balance short-term profit with long-term strength. Netflix's decision to change its pricing reflected a move away from volume acquisition strategy ($7.99 per month fee) that it could not sustain.

A popular theory is that much of Netflix's business came from "customer inertia" -- customers don't care much about the service either way but the price was low enough for them to remain on the books. With the new pricing structure, these customers decided to jump ship. Now, the company can interact with and maximize the value of customers who like and are willing to pay for its services, even at a premium. Satisfy these customers, and Netflix could build long-term advocates who generate value for the company above and beyond its fees.

However, its communication about the new changes has been abysmal. Customers, even loyal ones, have a bad taste in their mouths.

"What Netflix had the chance to do was increase trust and build more solid relationships, and instead they made customers wary and antagonistic," says Rogers. "The key to their future shareholder value lies in whether they can use this opportunity to become a textbook case for trust recovery or will bumble from here as they have already."

Hastings' apology letter is a good start, but it will need to act in customers' best interests to win back lost trust. Rogers says this could be a golden opportunity.

"Let's watch closely," she says. "If you believe they have the capability of recovering lost trust, then my advice is to buy their stock right now."