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Netflix: Price Hike Upset More Users Than Expected

Turns out Netflix customers took the service's recent price hike harder than expected. As a result, the multiplatform video rental company has had to cut third -quarter U.S. subscriber projections by 4% from 25 million to 24 million. "The majority of the shrinkage, Netflix says, will come from its DVD-only customers," reports All Things D.

Still, "Netflix now sees 9.8 million streaming-only customers, down from 10 million previously, and 2.2 million DVD-only customers, down from 3 million expected previously," Barron's Tech Trader Daily reports. "Total streaming  said it expected a bump in third-quarter revenues as a result of the price hike (for DVD and streaming video joint subscribers).

Despite the new subscriber growth projections, "Netflix said that its financial outlook hasn't changed," ZDNet writes. "In other words, the financials add up for Netflix."

Netflix also originally said it expected its growth trajectory to resume by the end of the year, but the chances of that are now looking less likely. Regarding to change, GigaOm writes: "That appears to have had an effect on the number of people subscribing to the service."

Netflix CEO Reed Hastings said he saw all this coming. "We knew what we were getting into," he said, according to All Things D. "We tried to be as straightforward as we could, and that has worked out very well for us."

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

1 comment about "Netflix: Price Hike Upset More Users Than Expected ".
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  1. Fj Rich from EPI, September 15, 2011 at 2:47 p.m.

    I'm (4) of those dropped subs, and many around the office have joined in dropping Netflix. NF either did a poor job of explaining the "real" benefit to customers, or it just didn't concern itself w/ this subordinate to profits.

    The purpose of a business is not to "make a profit" but to "satisfy customer requirements while making a profit." Simply put, the value of NF at $17.16/mo for the same products you used to pay $9.45/mo deserves serious attention and explanation. That's a 75% price increase Y/Y, and in the worst economic conditions in 76 years.

    I may be missing something in NF's offerings, but if this is one of those times when it really is as it appears to be they're about to eat crow.

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