Skip to main content

Netflix lost 800,000 subscribers during Q3, headed into the red in Q4

Netflix-Reed-Hastings
Image used with permission by copyright holder

In its earnings call with investors today, Netflix announced that it lost about 800,000 subscribers during the third fiscal quarter of this year. Over the same period, the company also managed to bring in record revenue, exceeding the expectations of Wall Street analysts.

Last month, Netflix announced that it expected to have a total subscriber base of 24 million at the end of this quarter. The actual number is 23.8 million (21.5 million streaming, 13.4 million DVD rental) subscribers. While this is only slightly lower than anticipated (if you can call 200,000 of anything ‘slight’), investors are not taking the news well. Netflix’s stock has tumbled more than 20 percent in after-hours trading to around $92 (at the time of this writing). That’s down from a high earlier this year of about $300.

Netflix posted profits of $62 million, a 63 percent jump from last year, on $822 million in revenue (at 49 percent leap). Wall Street analysts had expected revenue of about $811 million in the third quarter.

The drop in subscribers follows a tumultuous three months for Netflix and its CEO, Reed Hastings. In July, the company announced that it would boost the price of receiving both streaming services and DVD rentals by a minimum of 60 percent a month (from one $9.99 plan to two separate $7.99 plans), sparking user outcry that continues to reverberate throughout Netflix headquarters, for sure.

Then Hastings announced that Netflix was going to split in two, and create two separate businesses: Netflix would be streaming-only; and a new company, foolishly named Qwikster, would handle the mail-order DVD rental business. Hastings justified the move, saying that the two sides to the business already operated independently inside the company, it made good sense for them to split into separate entities in public as well.

Once again, customers became enraged and, less than a month later, Hastings reversed the Qwikster decision, saying that Netflix would remain one company.

In a letter to investors released today (pdf), Netflix had this to say about its back-to-back debacles:

…We think that $7.99 for unlimited streaming and $7.99 for unlimited DVD are both very aggressive low prices, relative to competition and to the value of the services, and they are the right place for Netflix to be in the long term. What we misjudged was how quickly to move there. We compounded the problem with our lack of explanation about the rising cost of the expansion of streaming content, and steady DVD costs, so that absent that explanation, many perceived us as greedy. Finally, we announced and then retracted a separate brand for DVD. While this branding incident further dented our reputation, and caused a temporary cancellation surge, compared to our price change, its impact was relatively minor. Our primary issue is many of our long‐term members felt shocked by the pricing changes, and more of them have expressed that by canceling Netflix than we expected.

The company expects its US subscribers to grow slightly during the fourth quarter, from 20 million streaming customers to 21.5 million; and from 10.3 million DVD customers to 11.3 million. Despite the growth, and expansion in the UK and Ireland early next year, Netflix says it expects to fall into the red during the fourth quarter.

Andrew Couts
Former Digital Trends Contributor
Features Editor for Digital Trends, Andrew Couts covers a wide swath of consumer technology topics, with particular focus on…
10 best stop-motion animated movies of all time, ranked
Coraline crawls through a dark tunnel.

Stop-motion animation is one of the most creative and beloved subgenres -- and it only seems to get better with time. The greatest movies in this category showcase the hard work and artistry of the inventive minds behind these stories, which often take a long time to commit to film. Each frame is a painstakingly crafted work of art, all aimed at creating immersive worlds full of unforgettable narratives and characters.

From obscure modern classics like The Wolf House to genre-defining masterpieces like The Nightmare Before Christmas, the best stop-motion animated movies highlight the full potential of the medium to deliver complex stories alongside gorgeous and distinct visuals. The craftmanship on display in these films is a testament to the power of animation and those who boldly push the genre's boundaries to create enchanting realities.
10. James and the Giant Peach (1996)

Read more
The 50 best anime on Hulu right now
Gintama anime key art featuring Gintoki leading the supporting cast of the series.

Even when it's not the primary destination, Hulu is still easily among the best mainstream platforms to stream some of the best anime available. It's an especially great supplement for audiences already fans of the streamer's live-action originals, boasting impressive diversity in its anime offerings across film, TV, and various genres.

For customers who aren't subscribed, the Disney Bundle is more than worth consideration to back up Hulu's anime library. This package deal gives viewers countless hours of content through Disney+, ESPN+, and the base ad-supported Hulu plan. Fans will have access to all the Star Wars, Marvel Studios, National Geographic, and sports content they could hope for on top of Hulu's anime catalog.

Read more
Nuggets vs Mavericks live stream: Can you watch for free?
Nikola Jokic squares up a free throw on the court.

Luka Dončić and the Dallas Mavericks take on Nikola Jokić and the Denver Nuggets today. Playoff seeding implications aside, it's always a must-watch event whenever two of the greatest international players of all-time do battle.

This one is set to start in about one hour, at 3:30 p.m. ET, and will be televised on ABC in the United States. If you don't have cable or you're looking to finally cut the cable cord, there are a bunch of different ways you can watch a live stream of the game online.
The Best Way to Watch the Nuggets vs Mavericks Live Stream

Read more