Netflix’s 60% price hike in September ended up doing a lot more damage than what Netflix thought. The company reported that they lost over 800,000 subscribers this quarter. Of course, it might seem like a lot, but they still have just under 24 million subscribers paying away.
However, the real damage is that Netflix stock took a nose dive during the past month and went down by 37% to around $75 per share, which is a far cry from the $300 per share that Netflix maintained during the summer months.
Despite all of the recent backlash that the company has received, Netflix reported $822 million in revenue for the third quarter and earnings per share of $1.16. This beat estimates of $811.79 million revenue and earnings per share of 96 cents.
In a letter to Netflix shareholders, the company mentioned it handled the September price increase and the separation of DVD rental and streaming services rather poorly:
“What we misjudged was how quickly to move there. We compounded the problem with our lack of explanation about the rising cost of the expansion of streaming content, and steady DVD costs, so that … many perceived us as greedy. Finally, we announced and then retracted a separate brand for DVD. While this branding incident further dented our reputation, and caused a temporary cancellation surge, compared to our price change, its impact was relatively minor.”
They’re very correct on the fact that announcing and retracting separate brands for DVD rental and online streaming made them look pretty dumb, and while they say that the impact of this has been fairly minor, we’ll have to wait until next quarter’s results to really see if Netflix screwed the pooch on this one.