10.26.2011 11:23 AM
Netflix reports loss of 800,000 domestic subscribers in Q3, plans expansion to UK, Ireland

The number of U.S. Netflix subscribers fell by 800,000 from the prior three months to 23.8 million, a reaction in large part to the company beginning to offer content streaming and DVDs separately, each for $7.99 per month, the company said this week.

The company, which has lost subscribers since announcing the price increase in July and plans to spin-off of its DVD business into a service called Qwikster, has lost some of its luster among investors and many customers. Prior to the price hike announcement in July, Netflix stock traded near $300 per share. In after-hours trading following its Oct. 24 earnings announcement, the stock traded near $71 a share.

"Our primary issue is many of our long-term members felt shocked by the pricing changes, and more of them have expressed that by cancelling Netflix than we expected," the company said in its third-quarter letter to shareholders.

The Netflix business outlook for the fourth quarter of the year forecasts domestic streaming subscription growth of 1.5 million. The company, which said two weeks ago that it was dropping plans for its Qwikster spin-off, projected domestic DVD subscriptions to climb by 1 million in the fourth quarter.

Netflix also announced Oct. 24 it would expand its streaming service to the United Kingdom and Ireland early next year. Netflix subscribers in the UK and Ireland will be able to watch TV shows and movies instantly from their TVs various devices capable of streaming from Netflix, as well as on PCs, Macs and mobile tablets and phones.

The company said the expansion into the UK and Ireland is expected to make its global operations unprofitable. After those launches, Netflix will pause on new international expansion until it returns to global profitability, the letter said.

Netflix began streaming content to subscribers in the United States in 2007. It added Canada in 2010 and 43 countries in Latin America and the Caribbean in September 2011.

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