Tuesday, October 25, 2011

Netflix Subscribers Not Happy Campers; Earnings Show It

Netflix lost 800,000 U.S. subscribers in the third quarter, the result of its decision to raise prices and split its DVD and streaming businesses.  Its projection for the fourth quarter is a loss of 2.6 million DVD accounts.

Despite that news, Netflix posted $822 million in third quarter revenue (up 49% year over year ) and net income of $62 million (up 63% from a year ago).  It does expect fourth quarter revenue and net profit to drop.

Customers are not happy that they have to pay separately for a DVD subscription ($7.99) and for a streaming subscription (also $7.99), though there is a bundled price of $15.98, savings of one penny.

They're also disappointed that the streaming video library is quite limited, especially when it comes to TV shows.

Netflix CEO Reed Hastings has promised to expand the streaming library, but whatever he does, it might be too late.

The company has also expanded into foreign markets, which may help with its earnings, but not necessarily with American customers.

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