Netflix cuts 3Q forecast by 1M subscribers
Packaged DVDs await shipment at the Netflix headquarters in San Jose, Calif. (Jan. 29, 2002) Credit: Getty
Netflix Inc. cut its third-quarter forecast by 1 million U.S. subscribers Thursday, sending its shares down nearly 19 percent, as the company known for rapid growth expects more fallout from a price increase on its DVD service.
Netflix said it would have 24 million subscribers at the end of the third quarter, down from a prior forecast of about 25 million given soon after the July announcement of the price increase.
The decision by chief executive Reed Hastings to raise rates for customers who still want DVDs by mail took effect earlier this month.
Netflix now expects to have 2.2 million such subscribers, down from the previous forecast of 3 million. The company also cut its forecast for streaming-only subscribers, to 21.8 million from 22 million.
The decision to increase the monthly subscription for a joint streaming and DVD rental service by as much as 60 percent caused an uproar among customers and bloggers.
For U.S. customers, the price for renting one DVD at a time plus unlimited streaming increased from about $10 a month to about $16 per month.
The company's stock fell 18.91 percent to close at $169.25 on Nasdaq yesterday.
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