Netflix Gets Dissed by Customers, Shares Bleed 18%
Netflix Inc (NASDAQ:NFLX) crashed over 18% today morning as Netflix revised its domestic customer forecast down 4% from 25 million to 24 million. More importantly, the 24 million projected domestic subscribers is less than the 24.6 million subs Nextflix had in the second quarter. Thus, the company is signaling an expected decrease of about 9.7% in subscribers.
The million customer drop was a result of the streaming video company’s new pricing policy. The new subscription plans force subscribers to separately pay for DVDs and video streaming, unlike now when subscriber pay together for the services.
Netflix (NASDAQ:NFLX) is walking a tight rope over prospective land mines: on one hand, content providers are pressuring Netflix to offer attractive prices, and on other hand the company faces increasing competition from Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG), and Redbox (NASDAQ:CSTR). Recently, Starz Entertainment (NASDAQ:LSTZA) busted their future with Netflix because the two media companies couldn’t agree on prices during contract renewal negotiations.