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Netflix drops 800,000 subs in US, expects bleak fall

updated 05:05 pm EDT, Mon October 24, 2011

Netlfix loses 800K subs over pricing, Qwikster

Netflix faced a tough end of the year after tough results and a more difficult fall. It lost 800,000 subscribers in the US over a combination of its price hikes for those who want to both stream and watch DVDs as well as the flip-flop on Qwikster. It ended up with 23.79 million total US customers, lower than the 24.5 million most market watchers had predicted.

The company's actual revenue and profits were up 49 percent and 63 percent each, to $822 million and $62 million. Most of the better results came from those in Canada and Latin America, which helped it get 1.48 million total viewers outside of the US; most had expected just 1.25 million.

Netflix still predicted a dramatic shortfall in profit. Expressed in earnings per share, it only saw itself getting 36 to 70 cents per share versus the $1.16 it had just made. It also only saw a slight increase of between $841 million to $875 million in revenue where most had expected it to get $923 million.

Company chief Reed Hastings had admitted that the rapid and ill-received changes had "hurt our hard-earned reputation" and based the lessened hopes on an expected increase in the number of those axing their service. He still expected Netflix to be profitable. The company would turn to a loss in early 2012, when it planned to expand to Ireland and the UK, but it would freeze expansion as the focus switched to gaining more customers in existing areas.

The movie provider was confident in the long run as it saw a rapid switch to streaming for many of it users. Under half of those who used streaming also wanted DVD, and only seven percent of new streaming customers were picking DVD. While some of that was due to the price hike, it sat at 21.45 million streaming users versus 13.9 million on DVD, hinting that Internet viewing was now clearly the main format.

In a dig at Starz backing away from the service, it claimed that Starz was just a small six percent piece of actual viewing time and that Netflix had ten times as much content online, leaving Starz out of any direct conflict. Amazon Prime wasn't a threat as it had less content and was mostly shadowing Netflix, and Hulu Plus was focusing on recent TV shows and not the back catalog.

Its current and planned-for subscriber drops may still be comforts to Apple, which has been reclaiming share for iTunes, albeit mostly in the pay-per-show arena. Netflix before the latest results had 64 percent of paid Internet video in the US, according to NPD data, where Apple is estimated to have just a few percent.



By Electronista Staff
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Comments

  1. Mr. Strat

    Junior Member

    Joined: Jan 2002

    +5

    Well, OK!

    With fewer people on the service, maybe we'll be able to watch a whole movie all the way through during peak times without having it stop.

  1. slapppy

    Fresh-Faced Recruit

    Joined: Mar 2008

    +2

    Gee

    I woder what they did wrong?

  1. Herod

    Fresh-Faced Recruit

    Joined: Jun 2007

    +5

    its funny

    they took themselves out as quickly as they did blockbuster.

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +4

    Just a matter of time

    So let's see. Netflix does deals with the TV and movie content creators, then allows users to stream movies and TV over the internet. For a fee.

    But you can watch many TV shows right from ABC.com, CBS.com, etc. It's only a matter of time before the studios "get it" and cut Netflix out of the loop.

  1. climacs

    Forum Regular

    Joined: Sep 2001

    +2

    not the end of the world

    unless, of course, you bought NFLX around $300.

    They'll still be around for awhile, but they've certainly shot themselves in the foot (after first inserting it in their mouths) with the price rise followed by the Qwikster fiasco. Now people are looking at their options if not outright quitting.

    They won't be around in the long run, anyway. I can see somebody like Amazon buying them to get their subscribers, it's just a matter of how cheaply they can be had before their subscriber base melts away.

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