The decision to increase the monthly subscription for a joint streaming and DVD rental service by as much as 60 percent, or $6 a month, caused an uproar among customers and bloggers.
Netflix shares have fallen nearly 40 percent since the price hike was announced.
The Los Gatos, California, company, which is under pressure from Hollywood studios and pay-TV rivals because of its aggressive pricing, has argued that it sees the future in lower-cost streaming services.
"We know our decision to split our services has upset many of our subscribers, which we don't take lightly, but we believe this split will help us make our services better for subscribers and shareholders for years to come," the company said in a statement on its blog.
Hastings, who is also on the boards of Microsoft and Facebook, is often seen as a visionary for building Netflix into a successful competitor first to Blockbuster and then, with the introduction of streaming, to traditional cable and satellite TV distributors.
But the cable and satellite TV companies have been pressuring Hollywood studios not to allow Netflix to undermine the $100 billion pay-TV ecosystem.
Netflix also faces growing competition in the streaming market from rivals such as Amazon.com Inc and Hulu.
For DVDs, Coinstar Inc's Redbox kiosks offer an alternative, and Dish Network Corp's Blockbuster Inc is trying to lure disgruntled Netflix customers with a free trial offer. Coinstar shares rallied 7.8 percent to $48.75 on Nasdaq on Thursday.
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