When the announcement was made over the summer that Netflix was essentially raising membership plan prices by 60%, many observers considered it only a matter of when, not if, subscribers would begin fleeing the DVD and video streaming service. The price changes started taking effect on September 1, and we can already see the impact: Netflix has revised its subscriber estimates and now expects one million fewer members than it had earlier anticipated serving in the third quarter of 2011. The company’s stock price is also taking a beating, dropping nearly 15% during a flurry of trading this morning.
Two weeks after Netflix subscribers had to begin dealing with higher-priced membership plans—$7.99 apiece per month for one-DVD-at-a-time mail service and unlimited streaming, rather than the old plan of $9.99 monthly for both services—the effects are already on display.
Now, as reported by USA Today and other news sources, Netflix has been forced to revise its subscriber forecasts. Initially, Netflix had expected to have some 25 million subscribers during 2011’s third quarter, but the company just lowered its estimate, to 24 million members. Netflix currently anticipates that there will be 800,000 fewer DVD-only customers and 200,000 fewer streaming-only customers than it had previously expected.
The New York Times Media Decoder blog noted that soon after news broke this morning regarding Netflix’s revised subscriber estimates, the company’s stock price dipped by almost 15% after the market opened.
Today’s drop comes after another drop in earlier September, when the announcement was made that content from Starz Entertainment would no longer be available for streaming via Netflix. At that point, Netflix’s stock price took a 9% hit, falling within a few hours from to $233 to $211 per share.
Around midday today, the company’s stock price stood at $176, and by 4 p.m., it was below $170.