Netflix subscribers flee/stock drops with price hikes

[digitalbabe]

Per CNN:

NEW YORK (CNNMoney) -- Netflix subscribers threatened to flee in droves when the company whacked them with a surprise price hike, which kicked in this month.

Now they're making good on that threat. Netflix on Thursday cut its subscriber forecast for the current quarter, saying it now expects to end the period with 24 million customers -- down from the 25 million the company forecast just a few weeks ago.

That's also down from the 25.6 million global subscribers Netflix had on June 30, the end of its second quarter.
Investors punished the stock, sending Netflix (NFLX) shares down more than 16% -- even though the company did not change its earnings or sales guidance.

The writing has been on the wall since July, when Netflix angered many subscribers by saying it would begin charging separate prices for its DVDs-by-mail and streaming video plans. That amounted to a big price hike for Netflix customers, as the cheapest-possible bill for customers who want both services jumped from $10 to $16 a month.

Enraged customers flooded Netflix's site with tens of thousands of comments, as well as a barrage of tweets under the hashtag #DearNetflix.
Angry subscribers aren't good for business, of course, but even more concerning are the reasons for the price hike. Netflix is struggling to build and maintain a robust streaming catalog, but that's getting tougher as studios demand more money and threaten to take their content to Netflix's growing list of rivals.

As a result, customers have been complaining about a smaller selection -- and asking why they're paying more for less. Earlier this month, cable network Starz ended contract renewal negotiations with Netflix and will pull its movies and TV shows from Netflix early next year. It highlights the sometimes contentious relationship that Netflix has with content owners such as Sony (SNE), Walt Disney (DIS, Fortune 500) and Time Warner (TWX, Fortune 500), the parent company of CNNMoney.

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.

 

[DaMexiRican]

I was one that left lol

 

[Horhay]

It's only going to get worst as they continue to increase their price.

 

[BigRick]

I was close to cancelling but this keeps my daughter occupied when I need her to keep quiet LOL.

 

[digitalbabe]

Bick Rick, LOL

 

[Soundwave GI]

And, as usual, it's us who get screwed. We all take the kick in the ass so that netflix can maintain it's margin while the movie companies escalate theirs. It shouldn't be the consumers that protest. If all these streaming media companies told the movie companies "No, we can't charge that and expect to keep customers", then maybe there would be no choice but to lower the asking price. Like a "streaming strike"...but why do that when they can just pass the cost to us? Some of us will quit, while others will just go to the next provider who still has the contracts. If a big mac goes to $10, people will stop eating at McDonalds, but they'll just go to the next chain until the same thing happens. If only everyone could just quit all at once for a month.

 

[BurntPopcorn]

i am sticking with Netflix, however, i just stream, and that is fine for me, especially since i buy blu rays/3 D blu rays of the movies i want lol

 

[vivaperu348]

I just lowered to streaming only for Netflix since my family still uses it. However, I think I might be doing the 1-out-at-a-time Deal with Blockbuster since it includes Blu Rays and Games as well!!