We recently reported tumultuous times for Netflix, their investors and their stock price. Following their notorious price-hikes, and Qwikster fiasco, Netflix has now reported that they’ve lost over 800,000 customers in Q3. It seems as if the quick price hike without any real explanation is what Netflix is calling the reason for the mass exodus. Neflix finished off the quarter with 23.79 million U.S. based subscribers, which still seems like a whole heck of a lot, that is until compared to the 24.6 million subscribers with which they started the month. As one might expect, this report has continued to wreak havoc on the already battered stock which is off 37% from June 25 before they announced their price hikes. Now that the impending Netflix hammer has been dropped on your wallet, have you dropped DVD delivery, kiboshed streaming, or continued to just illegally watch content on the Internet? I’m not an analyst by a long shot, but it looks as if Netflix is headed towards bottoming out and might be a nifty pickup as they begin to expand their business to Europe. As always, buyer beware.
Netflix has recent both confused and annoyed their customers -- first with a recent massive price hike>, following by the sloppy handling of the now-dead Qwikster split. A recent letter to investors warned them that the price hike would likely lose them around 1 million customers, but that splitting the DVD and streaming services was the right strategic choice long term.
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Last night Netflix released their third quarter earnings, which indicate the company did lose 800,000 subscribers. According to the company, Netflix believes subscriber gains will be a little slow for a short while, climbing again next year as people slowly forget the price hike. The dip is terrifying investors, who've been pummeling Netflix stock for weeks.
Despite all of the jabs and venom directed Netflix's direction (they've been the butt of SNL jokes for weeks) all of this remains a likely small blip on the radar. The company acknowledges that they will likely run in the red for a few quarters next year due to consumer anger and a planned expansion into Europe.
However, Netflix still dominates about 65% of the digital distribution market, and their price point still competes fiercely with a cable industry that remains stubbornly fond of of bi-annual price hikes on what's already expensive product. Competing digital video services remain limited, with Netflix arguing Hulu is a "complementary" competitor because they focus on current TV seasons.
