Netflix, the online instant movie streaming and Digital Video service provider, has seen better days. For a while it seemed as if Netflix could do no wrong. Subscriber counts were constantly going up and their online library of movies was expanding at a tremendous rate.
However, everything has seemed to taken a turn for the worse. Last month Netflix announced that they would close the month with fewer subscribers than originally predicted. At the start of September Netflix predicted that their subscriber base would increase from 24.6 million users to 25 million. This figure was later changed to be 24 million, a decrease of 600 thousand.
Reasons for this decrease can be traced back to a three different announcements from Netflix. First of all, Netflix recently announced a pay increase for all of their various movie packages. Subscribers used to be able to get unlimited instant streaming of videos and 1 DVD out at a time for less than 10 dollars a month. After the price increase of about 60%, subscribers are now paying around 15 dollars for the same service. For the cost of the original package users are only able to use Netflix’s streaming service. Netflix then announced a decision to split their two services into two different entity companies. Their streaming service would retain the Netflix name while their DVD by mail service would be moved to a new entity called Qwikster. Shortly after announcing this plan Netflix retracted this idea and came across as unsure to investors. Lastly, Netflix has announced that they will most likely not be renewing a contract with provider Starz.
All three of these circumstances have led to shares of Netflix to drop considerably. In July shares of Netflix stock was going for almost 300 dollars. Shares are now going for around $174.23 which is down by about 17% before the price changes.