Sep. 15, 2011 at 4:37 PM ET
Netflix will probably lose a million more DVD plan holders by autumn's end than it had expected, the fallout continuing from its decision to not only split its DVD and streaming video plans but to also hike up its prices 60 percent.
In a "Q3 11 Guidance Update" sent out to its shareholders today, Netflix CEO Reed Hastings and CFO David Wells informed them that current expectation for the third quarter are for 2.2 million DVD-only plans, vs. a projected 3 million from July 25. The graph above shows they expect streaming members to stay constant, with 9.8 million expected for the fall, vs. 10 million streaming-only projected in July.
While the letter softens the blow by prefacing the news with "Our financial guidance for the quarter is unchanged, as is our international subscriber guidance," it still gives shareholders this: "We are, however, lowering our domestic subscriber estimates."
The execs still paint a rosy picture of the company's future: "Despite the guidance revision, we remain convinced that the splitting of our services was the right long-term strategic choice ... We know our decision to split our services has upset many of our subscribers, which we don't take lightly, but we believe this split will help us make our services better for subscribers and shareholders for years to come."
The company faced an outpouring of vehement protest to its changes, mainly through its Facebook page. Many championed the DVD-for-a-dollar-a-day Redbox as an alternative, In an informal poll we included in this story, we asked if readers were going to cancel their Netflix subscription. An overwhelming majority, 55 percent, said they would. Now it looks like Netflix is starting to see those threats become reality. We'll know more when the third quarter report comes out next month.