Monday, July 25, 2011

DVD Continues Decline, Netflix Price Hike

Chart describes Netflix subscriber mix for Q3 2011. I was surprised at the difference between the numbers for streaming-only and DVD-only subscribers. We've all been hearing how traditional media is on the decline but this chart is sort of a slap in the face. Most people get their movies via streaming and I can't blame them. Just fire up the lappy, a couple clicks, and you're watching a hi-def movie. Middle of the day or night, no traffic, no lines, no commercials, no rude people. Can't beat it.

Here's a clip from ZDNet's coverage of Netflix projections and recent rate hikes:

Netflix defended its decision to raise prices on DVD and streaming movie bundles, but does anticipate some impact to the third quarter as it delivered a weaker-than-expected outlook.

Netflix reported second quarter earnings of $68.21 million, or $1.26 a share, on revenue of $788.6 million. Wall Street was looking for earnings of $1.11 a share on revenue of $791.5 million. The three months ended June 30 reflect a quarter that ended before Netflix changed its pricing model. Neflix ended the second quarter with 25.56 million subscribers.

But all eyes were on the company’s outlook with the price change. Netflix decoupled its DVD by mail and streaming media plans. One DVD out and streaming movies is now $15.98. Netflix said in a shareholder letter:

Some subscribers will cancel Netflix or downgrade their Netflix plans. We expect most to stay with us because each of our $7.99 plans is an incredible value. We hate making our subscribers upset with us, but we feel like we provide a fantastic service and we’re working hard to further improve the quality and range of our streaming content in Q4 and beyond.

Rest of ZDNet's story.

No comments:

Blog Archive