Netflix Loses 800k Subscribers

[Greg Tito]

Netflix Loses 800k Subscribers

After raising prices and the unsuccessful split of its services, Netflix has lost almost a million customers.

2011 has been a rough year for Reed Hastings, the CEO of Netflix. With the price of licensing deals from Hollywood entertainment companies rising, Hastings "Just kidding" and put humpty-dumpty back together again [http://www.escapistmagazine.com/news/view/111610-Netflix-Splits-Streaming-and-DVD-by-Mail-Services]. The debacle continues for the company that was once the darling of Web 2.0, with its stock dropping 37 percent on Monday alone and analysts predict losses through 2012 as Netflix tries to rebuild its base.

Hastings said he is not going to try to expand any time soon. "Pausing is a good thing from an investor standpoint," he said. "We are going to pause and restore our global profitability."

Three months ago, Netflix reported 24.6 million subscribers, but that number dropped to 23.8 million at the end of September. For many companies who were in decline from people who "cut the cord" from content providers like cable and satellite TV, the fall of Netflix can be seen as a boon.

"For those on the wrong side of the cord cutting debate the last several years - the cable/satellite/telco operators, Netflix's subscriber slowdown and escalating content costs are a source of relief," said a financial analyst from Morgan Stanley.

While I can see that Netflix's public reputation has taken a hit - Hastings was even lampooned on a recent web-only skit on SNL as the complete opposite of Steve Jobs [http://www.nbc.com/saturday-night-live/video/charlie-rose-steve-jobs/1362606] - the service still performs as advertised. I watch Netflix using my Xbox 360 and PS3 regularly, and my wife loves watching Mad Men on her new Android phone. My question for you is, how much does this news really affect you as a customer? Do you discontinue services or refuse to buy products based on how their stock is performing?

Source: Hollywood Reporter [http://www.washingtonpost.com/business/netflix-shares-drop-37-percent-after-company-loses-800000-customers/2011/10/25/gIQAMQJoFM_story.html]

Permalink

 

[Quiet Stranger]

I thought there would be a mention of that one company no longer allowing Netflix major hollywood movie titles in its roster of movies.

 

[JochemDude]

Sometimes you wonder just how far the people who call those shots have their heads are up their ass.

 

[Armored Prayer]

That reminds me I have to cut my subscription to Netflix. I just simply can not afford it and I trying to cut my useless spending.

Thats quite a blow to them tough. I wonder if it well get worse?

 

[Waaghpowa]

I'm Canadian, so it doesn't affect me at all. Some people are being really whiney about this, the Canadian Netflix has considerably less then the American one and you guys have other streaming services like hulu or the network sites that allow you to watch their shows, this DVD service isn't even available in Canada. Not only that, Canadian isp's severely limited bandwidth usage forcing you to watch your total usage to avoid going over. It's a situation where the dvd service would actually be useful. Fox blocks Canadian ip's and we can't even access sites like showtime.

 

[Tireseas_v1legacy]

Memo to Netflix: Strip your CEO of all power and get some intelligent people running the actual company before he realizes you've been dosing his food with anti-psychotics and stops taking his meds again.

 

[DustyDrB]

Man. I still use the hell out of Netflix. Oddly enough, I haven't actually watched a movie with it since February I think. Good thing that TV show library has grown a ton.

 

[Mischlings]

I can't say I'm surprised. Though, it does seem that the stock drop is a bit of an overreaction. They increase the price of service by 60% and the number of users drops by 3.25%, yet they lose 37% in their stock price? Admittedly, not all people are going to still use both DVD and streaming services, but unless more than 12 million people drop one of the services, they shouldn't really lose any revenue from this entire debacle over the long term, and stand to gain from all of this.

Is there something I'm missing here, or is the stock market reacting to perceptions more than performance yet again (I'm aware that the price split hasn't happened yet, so there is a loss of revenue in the short term, but that seems extremely small in the big picture).

 

[Veldel]

I think it would be hard for me to cancel my sub for netflix I basickly use it in place of cable

 

[Veldel]

Man. I still use the hell out of Netflix. Oddly enough, I haven't actually watched a movie with it since February I think. Good thing that TV show library has grown a ton.

I only got 1 movie from them and thats when Ninja Assassain first came out on Blu-ray I just love my steaming service more xD

 

[Fappy]

I never used their DVD service anyway so I really don't care. There's enough to stream to keep me happy.

 

[gmaverick019_v1legacy]

as much as i didn't like the change in prices...netflix is still much much better than cable or any other service out there, so i'm keeping it for now..

 

[Something Amyss]

My question for you is, how much does this news really affect you as a customer? Do you discontinue services or refuse to buy products based on how their stock is performing?

In general, no, but sometimes.

I think if I were a new consumer entering into Netflix, I'd be concerned with the loss of membership. Their size is one of the big things that keeps them viable. If they continue to lose members, it might affect the quality of my service.

As it is, I'm kinda locked in. Enough so that adding a fee for online (while annoying) didn't stop me, nor did Kwikster (Though I am glad they killed it).

And while it's the changes themselves more than the stock price or customer loss that would be the problem, if I saw "Netflix prices plummet" or "Netflix loses 800K subscribers," it'd probably resonate more as a new consumer.

Certain things rely on continued support. If Apple was just a flash in the pan, would you really want to invest in an iPod and iTunes? Or Google and Droid, for that matter. And an ongoing service is certainly one of those issues. Part of my reason for purchasing a Kindle was that the company is strong. Mostly because I didn't want to get stuck with a (then) 400 dollar paperweight in three months. Not DIRECTLY about stocks, but still.

I'm not going to start or stop buying my clothes based on stock prices, unless there's an accompanying article saying something like "Harbor Bay T-Shirts contain larva that will invade your brain and turn you into a mutant cockroach."

...And even then, I'd wonder what KIND of mutant cockroach before I stopped buying.

Hope this makes sense, because that's my take on the question.

 

[Avaholic03]

I actually find that kind of surprising. For how much people ***** and moan about netflix I thought they would atleast be intelligent enough to understand that they will not get a better deal for the amount of content provided anywhere else.

I think this bad publicity has just been the motivation for people who already intended to stop their account. Because you're right, it is still the best service out there, and it's really not that expensive. But I'm betting the majority of those 800,000 people never used Netflix anyway, and were just throwing money away until this news reminded them that they had an account, so they canceled it.

 

[TheYellowCellPhone]

I can't help but remember The Oatmeal comic about Netflix.

Spoiler

Not too much of a surprise to me.

 

[Epona]

I actually find that kind of surprising. For how much people ***** and moan about netflix I thought they would atleast be intelligent enough to understand that they will not get a better deal for the amount of content provided anywhere else.

I think this bad publicity has just been the motivation for people who already intended to stop their account. Because you're right, it is still the best service out there, and it's really not that expensive. But I'm betting the majority of those 800,000 people never used Netflix anyway, and were just throwing money away until this news reminded them that they had an account, so they canceled it.

They were Netflix subscribers but they never used Netflix? Desperate much? People were upset about the bad decisions Netflix was making and some of them dropped Netflix. Why is that so hard to believe?

When people say "boycotts never work", what they are really saying is "even if they do work, I will pretend it was a different reason". Netflix lost enough customers that they decided not to go forward with two services, sounds like a win for the customer to me.

 

[LadyMint]

I like Netflix. Yes, they have made some stupid decisions recently, but at least they took back one that I thought would have really been shooting themselves in the foot. The price hike is not a terrible thing, in my humble opinion, because comparatively it's still better than other streaming options based on my personal useage. I will admit, though, that their price hike has deterred me from wanting to add the DVD option to my account. I wouldn't order DVDs enough to warrant that much of a climb.

 

[XT inc]

They lost me as a canadian subscriber after the first month, all they had was 3 star titles, and a little games of www.netflix.com search for " any movie, t.v show, or anime you'd like to see", hit enter....Nope.

I was kind of hoping it would spur the public into the realization that our data caps were bullshit and help get them increased, but no they bitched out and decided to offer low res streaming instead.