Netflix Subs Bolt

Publish date:

Netflix’s rocket-propelled subscriber
growth just hit an air pocket of customer fury.

Following a dramatic shift in pricing that went into
effect for existing customers Sept. 1, the video company
chopped U.S. subscriber estimates for the third
quarter of 2011 by 1 million — meaning it expects to
lose about 600,000 domestic customers.

Investors sent Netflix shares into a tailspin following
the revised forecast. After dropping 15% in earlyday
trading last Thursday, Netflix shares closed Friday
at $155.19 — down 26% in two days.

In July, Netflix aggravated many customers after announcing
a price change that eliminates the combined
DVDs-by-mail and Internetvideo-
streaming plans. That
forced users who want both
services to pay as much as
60% more per month.

Netflix previously expected
25 million total U.S. subscribers
at the end of the
third quarter but now anticipates
24 million total subs.

Netflix will “get better”
at being able to “precisely
forecast and predict the behavior
of that many people
on fairly radical change,” chief content officer Ted Sarandos
said at the Paley Center’s International Council
2011 conference in Los Angeles last Thursday.

Sarandos downplayed the recent decision by Starz
Entertainment not to renew its deal with Netflix, for
a reported $300 million annually. Their current deal
expires Feb. 28, 2012. “Buyers and sellers disagree on
values and prices all the time,” he said.