Netflix lost 800,000 subscribers in the last three months, according to the company’s third quarter financial report on Thursday. The streaming-and-DVD site is down to 23.8 million users as of September 30, 2011, compared to 24.6 million users on June 30, 2011.
The reason for the loss, per a letter to investors written by Netflix CEO Reed Hastings and CFO David Wells:
“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.”
In June, there were a lot of blogs and post on twitter, and Facebook. There were also many people around the world complaining about Netflix’s loses. The Company now expects to lose money for all of 2012. The primary culprit is Netflix’s pricey plan to expand its streaming video service into the United Kingdom and Ireland, but a wave of subscribers jumping ship hasn’t helped.
Netflix is selling 2.86 million shares at $70 apiece below Monday’s closing price to mutual funds and accounts managed by T. Rowe Price. People are also complaining about the new price increase from $9.99 a month to $16.99. That offering is scheduled to close around November 28.It’s also selling $200 million in convertible bonds to investment funds affiliated with Technology Crossover Ventures, a fund that has been investing in Netflix for more than a decade.
Netflix, which had $366 million in cash on hand at the end of last quarter, is facing threats from rivals with much deeper pockets. Places like Hulu, and Redbox are stealing Netflix’s business. Because Netflix raises their prices people have been dropping their accounts because it’s too expensive. In the movie business they’re becoming crowded, more people keep making movie industries. Theres alredy three major ones like Hulu, Netflix, and Redbox. Beyond direct rivals like Hulu and kiosk service Redbox big tech players like Amazon and Google are jumping into the streaming game.
Five months ago, Netflix was a $300 stock. Now it’s a ~$75 stock. It’s raising $400 million at its new, clobbered stock price to fund all its new content investments. And… it’s going to lose money next year!