From the files of Howard Beale: Netflix stock took a beating on Thursday after their increased charges for DVDs and streaming movies took effect, causing potentially thousands of users to unsubscribe from the service. With the rates for ordering DVDs and instantly streaming movies separated to a base rate of $8/month for each, Netflix stock experienced a drop of 15% when the stock market opened this morning.
After breaking the news of the price increases in July, Netflix estimated that they would finish out the third quarter with 22 million subscribers for the instant streaming service, 12 million of which would also continue to order DVDs separately. 3 million subscribers were expected to opt for the DVD service alone. After this morning's events, Netflix is expecting 21.8 million subscribers to continue with the instant streaming service and 2.2 million subscribers to opt for the DVD service. Potentially, Netflix could be losing roughly 1 million subscribers.
In response to the new numbers, Netflix showed resolve in a statement to its shareholders: "Despite the guidance revision, we remain convinced that the splitting of our services was the right long-term strategic choice."
Are you still a Netflix subscriber?
Photo courtesy of MGM.