Rich Fiscus
23 Sep 2011 15:24
The decision, by Netflix, to increase the price for using both their disc by mail and streaming services isn't just costing them existing customers. According to Chief Financial Officer David Wells it has also resulted in fewer new subscribers.
Replying to a question yesterday at a Goldman Sachs conference, he said, "what we see is the word of mouth did make an impact."
He didn't elaborate on how much new subscriber growth was affected. He also emphasized, "We're still the market leader," but also admitted the continuing trend of subscribers cancelling wasn't anticipated.
In the past, he said, the effect of a price increase had been immediate, followed by a return to growth. That was not the case after the drastic changes announced in July.
"What we saw in Q3," said Wells, "was a spike and then a sort of a steady response through the quarter, so more cancels through the quarter."
Wells also pointed out there has been no international impact. Not exactly a surprise considering Netflix customers outside the US didn't experience any changes.
Remarkably, he suggested Netflix might be open to offering individual streaming video rentals at some point in the future, even though they aren't considering right now. This is a reversal from their long standing position.
The full affect of the Netflix price hike is still up in the air. Just today, Blockbuster introduced a new streaming and disc rental service exclusively for Dish Network subscribers.
They also hinted that a standalone streaming service for non-Dish Network subscribers might be coming in the future.
Some see this as Amazon's best opportunity to attract disgruntled Netflix customers with their own streaming service offered to Amazon Prime members. One has even gone so far as to suggest Amazon could buy Netflix, although that seems far fetched for a number of reasons.