In light of the recent price increase at Netflix, it made quite a few subscribers mad. Netflix expects to lose around 1 million total subscribers in the short term after the price changes. Price changes that split the streaming and DVD costs separately when they were combined previously which inevitably increase the subscription prices. On top of the price increase Netflix will lose their contract with Starz in February which will cost them around 1,000 total streaming titles from their collection. Netflix’s reasons for splitting the DVD plans were as follows:
• to create a dedicated DVD rental division that takes pride in great execution and maximizes the opportunity for disc rental over the coming decade;
• to enable us to improve our global streaming service even more rapidly, because it is not meshed with a domestic DVD business;
• to enable us, with the growth in revenue, to license more streaming content and thereby improve our streaming service even more;
• to remain very price aggressive, with $7.99 per month for unlimited streaming of a huge library of TV shows and movies, and $7.99 per month for unlimited DVD rentals, 1 out at-a-time.
At the time of this writing, Netflix stock is down 16% with a 33 point loss totaling at $175.29 stock price. There is a significant loss in consumer and investor confidence in the company which is evident with the lost off subscribers and lower stock prices.
Netflix will have to find a way to keep investors interested in the company fast before their stock price drops too low.