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Netflix Loses 1 Million Subscribers, Shares Tumble 19%

Netflix lowered its U.S. subscriber number by 1 million customers following backlash from the 60 percent price increase.


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Netflix subscribers who threatened to cancel their memberships after the 60 percent hike increase are making good on those threats.

In a note to investors, Netflix said it will lose one million more subscribers than previously thought, ending the quarter with 24 million customers, not the 25 million it forecast just a few weeks ago.

On July 25th, Netflix expected to have 10 million streaming-only customers, 3 million DVD-only customers and 12 million with both. The company’s revised forecast now says they expect to have 9.8 million with streaming, 2.2 million with DVD only and 12 million with both.

Netflix included the following chart in its letter to shareholders:

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As a result, Netflix stock was down 19 percent, wiping out its entire 2011 gains. Netflix’s stock is down about 40 percent since the price increase was announced. “Despite the guidance revision, we remain convinced that the splitting of our services was the right long-term strategic choice,” Netflix reiterates in the letter to investors.

“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,” Netflix said in a statement.

At a press conference on Thursday, Sept. 15, 2011, Netflix chief content officer Ted Sarandos admitted the company underestimated customer reaction. “Being able to precisely forecast and predict the behavior of that many people on a fairly radical change is something we’ll get better at,” he said.





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