The Internet’s top movie-rental service, Netflix, has been losing subscribers steadily since July.
The issue? Rising prices and talk about complicating the renting process.
The popularity of Netflix was rapid and almost overwhelming. In the second quarter of this fiscal year Netflix reported having 24.6 million subscribers.
But their numbers dropped by 810,000 in the third quarter, weighing them in at 23.8 million.
Although that is still an astronomical number of subscribers, because of the price changes, Netflix expects that it will experience a global net loss.
Netflix announced that it would no longer offer access to the DVD-by-mail service and unlimited streaming video for $10 a month. Customers could pay $8 for streaming or $8 for discs or $16 for both. This, along with the limited selection for instant-streaming, caused an uproar.
So why aren’t they reversing the changes?
It seems the CEO of Netflix, Reed Hastings, isn’t worrying about it, stating that the selection of full season TV shows is “incredible.”
Hastings didn’t make it a big deal that Netflix has lost its contract with Starz (the company that owns the rights for Disney and Sony movies). The loss of this contract means an enormous chunk of movies are inaccessible to subscribers. They shouldn’t be counting on seeing the biggest films from the major studios on Netflix anytime soon.
That’s not exactly something to be excited about.
Shareholders aren’t excited about the drop in subscribers either.
Shares dropped 35 percent on Tuesday as investors learned of the dramatic decline in viewership.
Hastings didn’t see shareholders backing out of the company as a big deal either.
He stated that, even with the 60 percent price increase, Netflix is still “a good deal.”
Hastings is counting on growth in their instant streaming, and not investing much into the mailbox DVD program.
Is this a smart move? It’s hard to tell.
Netflix is expecting a growth in subscribers by December of this year.
“Streaming looked at in any reasonable time-frame is going to grow and grow,” said Hastings.
Will subscribers really come back? Or is Netflix going to be left to crash and burn like the video-rental giant Blockbuster?