Print 56 comment(s) - last by gmanthebrave.. on Sep 28 at 12:59 PM

U.S. subscriber predictions have been cut from 25 million to 24 million

Netflix has had a lot of troubles since it began making big changes to its service. It first increased the prices of its plans back in July, which outraged customers to the point of jamming Netflix's customer service phone lines.

To make matters worse, Starz decided not to renew its contract with the company because Netflix wouldn't make subscribers pay a premium price for Starz content. This means Netflix will lose Disney and Sony-related programming come February.

Now, Netflix is 
cutting its third-quarter forecast by 1 million U.S. subscribers, and has realized the full extent of customer wrath since raising plan prices by 60 percent as well as splitting DVD plans from streaming plans. 

"We know our decision to split our services has upset many of our subscribers, which we don't take lightly, but we believe the split will help us make our services better for subscribers and shareholders for years to come," said Netflix. 

The company is now predicting 24 million U.S. subscribers by the end of the third quarter, which has been reduced from a previous forecast of 25 million. Originally, Netflix predicted that 3 million subscribers would move to the DVD-only plan while 22 million would transfer to the streaming-only plan. Now, these predictions have fallen to 2.2 million DVD-only subscribers and 21.8 million streaming-only subscribers. 

"Clearly, if the third quarter is slipping, there's risk to the fourth quarter, as the year-ago period was a time when everything went right for Netflix," said Barton Crockett, a Lazard Capital analyst.

Despite the cuts in U.S. subscriber predictions, Netflix has maintained its third-quarter financial forecast and international subscriber outlook. 

Netflix has said that it needed to raise prices in order to 
afford the hundreds of millions of dollars it takes to purchase licensing rights from movie studios and television networks. These licenses help Netflix build its digital library. 

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: Seriously...
By nycromes on 9/15/2011 10:15:55 PM , Rating: 2
Well, I can understand if you were replacing your TV/Cable service with netflix, its a great deal. I on the other hand cannot replace my TV service with netflix (it wouldn't go over well in my house) so I'm paying for both. I didn't mind paying the pre-increase prices, but now, I just can't quite justify paying more for the same or less content in the near future.

Netflix really went about this in the wrong way in my opinion. They wanted to force people to stream by increasing prices at the same time as ISPs are capping connections. Not to mention the Starz thing, yeah, they really did get the short end of the stick. I wouldn't have minded a few dollars more, but my bill almost doubled. Bottom line, Netflix is cheap TV if it is now your primary delivery method, but for those who still have other TV service in their house, its an unnecessary expense. Gradual price increases would have helped, more content would have helped with the price increase, but what users got was a higher price with no real difference in service. You tell me why there is so much hate.

RE: Seriously...
By wempa on 9/16/2011 1:08:23 PM , Rating: 2
Excellent post. No need for people to start criticizing/insulting others. I don't currently subscribe to Netflix, but I could definitely see the value of Netflix only or Netflix plus a very basic TV package. Ideally, I'd eventually like to go to a Netflix-type service plus just an antenna for over-the-air TV. I just don't see the value of these big cable TV packages where 90% of the channels carry junk. You're also right about the timing of the price increase. It would be a different story if they combined the increased cost with better content. I'm sure a lot of people wouldn't even mind paying double the cost if the streaming content was greatly improved.

"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997

Copyright 2015 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki