Netflix expects a million fewer subscribers in wake of plan change

[DainBramaged]

Netflix has cut its subscriber projections by one million members in the face of its decision to split up its streaming and DVD plans, the company announced today. The Netflix exodus is expected to occur by the end of the company’s fiscal quarter, with the new subscriber level adjusted from expectations in July.

Netflix wrote a letter to its shareholders about the lowering of its projected counts of streaming-only subscribers by 200,000, and its DVD-only subscribers by 800,000. This would represent a 4 percent decrease in its current 25 million customer base, and a monthly revenue loss of at least $8 million.

Customers subscribing to both the $7.99 streaming plan and one of the DVD rental plans are expected to hold steady at 12 million subscribers, while streaming-only numbers are projected at 9.8 million and DVD-only at 2.2 million. “We know our decision to split our services has upset many of our subscribers, which we don’t take lightly,” says the letter, signed by Reed Hastings, CEO, and David Wells, CFO.

However, the company continues to stand by its maligned decision to split its streaming and DVD services. The letter states the company intends to “license more streaming content and thereby improve our streaming service even more,” and that the split will help improve global streaming services “more rapidly” now that it they are no longer tied to the domestic dealings with DVDs. “We believe this split will help make our services better for subscribers and shareholders for years to come,” reads the letter.

http://arstechnica.com/gadgets/news/2011/09/netflix-expects-a-million-fewer-subscribers-in-wake-of-plan-change.ars

[Ian David]

1. You know that you can't stream Citizen Kane on Netflix?

Also conspicuously missing:

Star Trek- The Original Series
My Dinner with Andre
Deathrace 20000
Koyanusquatsi
A Polish Vampire in Burbank
All the Star Wars movies
Fahrenheit 9/11
TV Nation
The Awful Truth

[wuushew]

Is this list up to date?

I was under the impression that Netflix had finalized the Star Trek IP this year with DS9 the last to be availble.

[Ian David]

5. I just double-checked. You are correct about star trek. Thanks! n/t

[frazzled]

4. You can't stream a ton of stuff.

That's why we just reduced ourselves to the DVD only plan (one at a time, $7.99). Frankly, we just don't use it that much anymore, and since we have an old TV, we've put off trying to stream it to our television set. And though I have a big monitor, I work at it all day and don't feel like sitting there watching a movie on my computer at night. That, together with the large gaps in what's available for streaming, didn't seem to make the full plan (or streaming only plan) a good buy for us.

[Ian David]

6. I like streaming, because it works with our ipones and ipad.

Great for long road trips.

I just wish it had porn.

[cui bono]

14. Get real.

And don't piss off David Lynch!

http://www.youtube.com/watch?v=wKiIroiCvZ0

[Ian David]

21. He has a point. But I like watching movies on my phone that I've already seen.

Plus, it's better than being bored.

I just wrote an email to David Lynch telling him that I just watched Mulholland Drive on my iPhone and thought it sucked.

[cui bono]

22. LOL. It sucked in the theater too!

I'm actually thinking of watching it again because an editor that I work with thought it was great. Pretty sure I didn't miss anything though...

But I did watch Blue Velvet again recently and it is still good, albeit disturbing.

I do not watch movies on a phone or computer though. I will watch TV shows that way. But I'm a film purist.

[Yavin4]

25. You Watch Porn on an Airplane

Please remind me of your itinerary when you travel. Thanks.

[LondonReign2]

8. Same here

They jacked up the fees to stay on the Streaming + DVD option, so we dropped streaming. There was just so much content that you couldn't stream...I took a look at our queue, and only about 20% of it was available for streaming so it made the decision pretty easy.

[SharonAnn]

10. Can't stream anything on my queue. Of course, I'm not into current movies.

[jberryhill]

11. The original series looks like it was cleaned up, too

The picture quality is freaking awesome for a 1960's TV show.

[WolverineDG]

27. Wrong on ST:TOS

It's not only in my streaming queue, I've streamed episodes on it. Everything Trek related is available for streaming, except DS9.

dg

[uncle ray]

2. revenue loss, i assume, after the price increase.

4% fewer subscribers after you nearly double prices sounds very profitable.

[IADEMO2004]

3. Netflix has lost Starz too

http://money.cnn.com/2011/09/01/technology/netflix_starz/index.htm


Translation: Starz wants more money. Now that streaming video is so popular, providers are upping the price for the content they're licensing to Netflix. One analyst predicts that Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

But Starz' move hits at a particularly delicate time for Netflix, which is hiking its prices to offset those mounting content costs. Netflix said in July that it would begin charging separate prices for its DVDs-by-mail and streaming video plans, raising the cheapest-possible bill for customers who want both from $10 to $16 a month.

Those price hikes kicked in on Thursday -- the same day Starz dropped its contract bombshell.

[Javaman]

17. they took a big hit losing Starz.

I heard that netflix offered them 300 million and they were still turned down. Which means that Starz has other plans for their movies.

I think the sun is starting to set on Netflix as content owners see the field expanding for their product.

what happens with Starz is being very closely watched in the industry.

Many are saying it's the harbinger of things to come.

[Proud Liberal Dem]

7. So

in the end, will it have been worth it for them to change it? :shrug: I'm on a DVD/streaming plan. Next month I'll be switching to streaming-only, since we utilize it the most.

[Romulox]

9. I smell a rat. Do they WANT to lose customers in order reduce the costs of new licensing deals?

That's really what it seems like, here. :shrug:

[taught_me_patience]

20. That's exactly what they are doing. n/t

[ThoughtCriminal]

12. Raising prices and losing content

I already dropped streaming from my plan since at least 80% of the movies I want are not available. Especially with Starz dumping Netflix, it just isn't worth the extra cost for the small selection. I might have stayed if the price increase came with a huge addition of extra movies and shows, but instead they are heading in the opposite direction.

[MilesColtrane]

13. Management just made a decision that pissed off most of their customer base, and...

resulted in a drop in revenue of almost $100 million a year...and they're sticking with it.

Fucking geniuses...

They'll probably go the way of Blockbuster in a year or two.

[Lucky Luciano]

24. Revenues ate not profits.

Their margins may be getting squeezed by those that don't want them streaming. Besides, their streaming content is 98% crap.

[truebrit71]

15. I dropped them. Can't expect people to pay double for the same thing they've been receiving..

..for months without it having repercussions..

Their stock price target has also been downgraded...

I think this may go down as one of the worst business decisions since 'new coke' back in the 80's..

[OneTenthofOnePercent]

16. We pretty much only ever used the streaming option... so we will stick with streaming only.

I find it really cool to watch old TV series in their entirity that only held marginal interests while on air.

[sakabatou]

18. No shit. What did they expect?

[jannyk]

19. Their stock's off nearly $40 today.

[bikebloke]

23. DVD's

I only used streaming to preview the first few minutes of films I'd never heard to to see if I wanted them to send me the DVD. Plus, the time they sent me a damaged DVD, so I could what happened at the end. Plus, they raised the price without informing me. I'm switching to DVD-only.

[Bluenorthwest]

26. They want to sell for a large sum what they buy for a small sum

they are greedy coming and going, and they forget that they make nothing, they are the delivery service, and they should adjust their financial expectations accordingly.