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


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.

Movies & TV

How Laika blends 3D printing and CGI to make mesmerizing stop-motion movies

With each film, Laika Studios pushes the bar higher for stop-motion animation. We explore Laika's latest techniques for its new adventure, Missing Link, which the studio it calls a Kaleidoscopic travelogue that ranks as its most ambitious…

Patreon is having another go at changing the way it charges creators

Patreon messed up pretty badly the last time it tried to change its payment system. Now it's having another go, though this time the changes mainly affect future sign-ups rather than its current community of creators.
Movies & TV

Disney completes its $71.3 billion purchase of 21st Century Fox

Now that Walt Disney Company has closed its $71.3 billion purchase of 21st Century Fox's movie and television assets, what does this future hold for franchises like X-Men, the Fantastic Four, The Simpsons, and the rest?
Movies & TV

Netflix confirms it won’t be a part of Apple’s new video-streaming service

Netflix has confirmed that subscribers to Apple's new video streaming service won't have the option to view Netflix content on it. Apple is set to unveil its new TV service next week.

Apple’s rumored magazine subscription service could also launch on Macs

Apple is widely expected to debut its new Apple News magazine subscription service at a media event scheduled for March 25. Now, through code leaks, it's also believed that users will be able to read magazines on their Macs.
Movies & TV

Apple bet big on TV and movie projects. Here’s what we know about them so far

Apple has an ambitious slate of original programming it has been developing in recent years, so will the March 25 event finally reveal when — and where — we will be able to see some of these TV shows and movies?
Home Theater

You can now watch four PlayStation Vue streams at once on a single Apple TV

PlayStation Vue subscribers can now watch March Madness in style via Apple TV, which can now stream up for four separate games to your TV at once, making it easy to catch all the on-court action.
Movies & TV

Once Upon A Time in Hollywood poster puts Pitt and DiCaprio front and center

Quentin Tarantino's ninth feature film, Once Upon a Time in Hollywood, uses the infamous 1969 Manson Family murders as a backdrop to tell a story set in bohemian Los Angeles. Here's everything we know so far.
Home Theater

Need to get rid of an unused Netflix profile? Just follow these simple steps

Need to delete an unwanted profile from your Netflix account? It's easy to do, no matter what kind of equipment you've got. Check out our handy how-to guide for step-by-step instructions.
Movies & TV

Bear Grylls goes interactive with Netflix’s Bandersnatch-esque You vs. Wild

Think you have what it takes to survive in the wilderness, Bear Grylls-style? You vs. Wild, an eight-episode interactive Netflix series that takes cues from Black Mirror: Bandersnatch, will let you prove it.
Home Theater

Dish TV customers can access up to 13 NCAA March Madness games in 4K

If you're a basketball fan looking to get your fix of NCAA Championship action in 4K, Dish TV will be airing up to 13 of the tournament games in the ultra high-def format, starting on Tuesday.
Movies & TV

Stranger Things season 3 teaser proclaims it's almost feeding time in Hawkins

With a sophomore season as strong as its first, Stranger Things is now moving on to season 3. Here's everything we've learned so far about the Netflix series' upcoming third season, premiering in July 2019.
Home Theater

What’s new on Netflix and what movies and shows are leaving in April 2019

Our complete list of what's new on Netflix for April 2019 and which titles will be removed will help you catch up on your bingeing, and also ensure you don't miss any titles heading into the streaming ether.
Movies & TV

In the new Hellboy clip, a giant problem leaves our favorite demon unimpressed

Hellboy is returning to the big screen in April 2019, with Stranger Things actor David Harbour taking on the title role. Here's everything we know so far about the reboot of the franchise.