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Netflix Loses 1 Million Subscribers, Shares Tumble 19%
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:
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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10 Comments (displayed in order by date/time)
Nobody likes price increases, and neither do I. However, I have compared costs for my video content locally, and Netflix remains one of the most cost-effective and low priced ways to enjoy a lot of very high quality video content. By using the streaming option only, one can get a lot of very good video content at a price that remains 1/3rd to 1/6th (or more!) of the cost for me to use cable or satellite (at least in my location). It is hard to argue with the value proposition…...
Boo-hoo. Everyone wants something for free, or damn near free. For 16 bucks you get unlimited streaming and as many “1 DVD at a time” discs per month. Let’s say that you could max that out at 15 disc per
month; what’s that going to run you at a rental store? That’s right, more than the 8 bucks Netflix is charging.
jim said..”“Netflix remains one of the most cost-effective and low priced ways to enjoy a lot of very high quality video content.”“
What a joke. Still no 1080p and still no surround sound. Netflix is in the dark ages.
I own a small integration company and Netflix has definitely had a positive influence on our customer base. I regularly point to streaming video services like Netflix as a practical reason to network a home. “It’s one thing” I say, “if the email you are downloading has a momentary slow down, in fact you likely won’t even notice. But if the movie you are watching stops because of a poor WiFi connection, that is a poor experience.”
Netflix validated everything we’ve been preaching for years. And they are right, long term they’ll win back and gain more customers and if their services improve because of increased revenue it’ll be a benefit to customers in the long term.
I cancelled by service. Not because of the price increase but the reminder I dont use the service enough to justify ANY price! LOL.
The streaming choices is poor, however, I think in the long run Netflix will become a better service and their subscription base will pick up. Its not overpriced, IMO.
Boo-hoo.
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Chris, there is no crying in baseball or movie rental subscriptions!
I don’t think the outrage is over the top, I think people have the right to be upset when a service they loved increased by so much. I know I cancelled my service as soon as I heard and now that I just found out DISH Network is coming out with a special offer for new and existing customers! DISH Network has teamed with Blockbuster, they have a bunch of cool offers that are available to New and existing DISH Network customers as well as non-DISH customers. Blockbuster has the most extensive library of movies, games and TV shows and you can get thousands of On-Demand titles straight to your PC or TV! Customers will also have access to over 100,000 movies, TV shows and games by mail with new releases coming out before Netflix and Redbox. You can exchange them inside a Blockbuster store and even get Blu-Rays at no additional price. The best thing about this new offer is that you won’t find these titles on DIRECTV Cinema or Comcast on Demand and everything is combined onto one bill! I actually work at DISH Network and I’ve been wanting to tell people about this for a long time and I want everyone to check it out!
I wonder how much it would cost to own all of your favorites and just stream what’s not worth owning. At some point after NetFlix is gone, you are still going to want to watch The God Father, and low and behold- you own it!
We avoid Dish at all costs. Clunky huge boxes, outdated technology, clunky coax cabling, no rs232 control on majority. Worst box to integrate 3rd party (well up there with scientific Atlanta cable boxes).
Their booth at cedia showed the same baby matress sized 722. Wow, why did they even have a booth. Ok so new stuff is coming out? Two years after competition. We have been able to convince 90% that want dish to go Directv.
Back to Netflix, rant over….
I canceled my subscription too!!!! We should’ve at least been grandfathered in and then they could’ve tried to muscle us out of it, like AT&T did with their unlimited data plan.