Netflix 3Q 2010 Results - 810,000 Subscriber Loss (23.79 M TL -13.93 M DVD/BD) - High-Def Digest Forums
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Old 10-24-2011, 06:15 PM
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Default Netflix 3Q 2010 Results - 810,000 Subscriber Loss (23.79 M TL -13.93 M DVD/BD)

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Netflix Posts 810K Sub Loss in Q3

24 Oct, 2011
By: Erik Gruenwedel




Expected subscriber loss in the United States is partially offset by 510,000 additions internationally.

As expected, Netflix Oct. 24 said it lost 810,000 net subscribers in the third quarter (ended Sept. 30) — a 145% downturn from the previous-year quarter.

The subscriber loss was partially offset by the net addition of 510,000 subscribers internationally as Netflix expands operations beyond the U.S. into Canada, Latin America and Mexico.

Netflix ended the quarter with 23.79 million subs in the U.S., which included 13.93 million DVD/Blu-ray Disc subs. That tally represented a 42% increase in domestic subs from the same period last year.


The Los Gatos, Calif.-based company also reported an international sub base of 1.48 million, which generated $23 million in revenue and an operating loss of $23 million.

Global net income reached $62 million, up 63% from net income of $38 million last year. Worldwide revenue increased 49% to $822 million from $553 million.

In a letter to shareholders, CEO Reed Hastings and CFO David Wells admitted management missteps “greatly upset” myriad subscribers with the ill-received price increase and the proposed‐and‐now‐cancelled Qwikster rebranding of the DVD service.

“In doing so, we’ve hurt our hard‐earned reputation, and stalled our domestic growth,” they wrote, adding that Netflix's fourth-quarter (ending Dec. 31) revenue and income would be lower than previously forecast.


The executives then dropped a bombshell of sorts saying that losses from international expansion would likely supplant domestic profits for a few quarters beginning next year.

"After launching the UK and Ireland, we will pause on opening new international markets until we return to global profitability," Hastings and Wells wrote. "We plan to do that by increasing our global streaming subscriber base faster than we increase our costs."

That news sent Netflix shares in a freefall, plunging more than 27% ($32) to $86.90 per share in after-market trading.

Meanwhile, in its zeal to upgrade quality of content to its streaming portfolio, Netflix accrued more than $539 million in licensing liabilities in the third quarter to bring its content spending through nine months to more than $1.3 billion.

By comparison, Netflix spent just $20.8 million on DVD/Blu-ray Disc content rights, or $62 million through the first nine months of the year.

Hastings and Wells said the flip-flop regarding separating Netflix's disc rental business into a stand-alone "Qwikster" service had a "relatively minor" impact on the company's reputation.

"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," they wrote.

Indeed, the executives said that just 7% of new Netflix streaming subs in the U.S. also want to rent physical discs. Hastings and Wells think DVD subscriptions will decline sharply in the current quarter, as reflected in the revised guidance, due to the Oct. 1 price increase to the combined streaming/disc rental option.

"Our weekly rate of DVD cancellations is steadily shrinking, as the price effect washes through, and in future quarters we expect DVD subscriptions to shrink more modestly," they wrote.

http://www.homemediamagazine.com/net...-loss-q3-25443
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Old 10-24-2011, 06:27 PM
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Heh.... Missed it by minutes! DAAAAMMMMMNNNN YOOOOOO!!! :biggrin:

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Originally Posted by Bloomberg
Netflix Inc. (NFLX), the video-rental service, posted third-quarter user losses that were worse than its September forecast and predicted more cancellations over a price hike. The shares plunged 26 percent in extended trading.

Domestic users fell to 23.8 million as of Sept. 30 from 24.6 million three months earlier, a bigger decline than the company projected. This quarter, total domestic subscribers are forecast to increase slightly, Los Gatos, California-based Netflix said in a website statement.

The outlook suggests Netflix will fall short of the 24.9 million customers analysts project this quarter, the average of 10 estimates in a Bloomberg survey. The number underscores the fallout from a September price increase and aborted plan to force subscribers into separate streaming and DVD services.

“To show even modest U.S. subscriber growth in the fourth quarter will require significant ramp-up in Netflix’s marketing spending,” said Paul T. Sweeney, director of research for Bloomberg Industries.

Netflix tumbled 26 percent to $88 in extended trading after results were announced. It rose 1.5 percent to $118.84 at the close in New York. The shares have fallen 60 percent from a closing high of $298.73 on July 13.

Investors are trying to gauge the extent of the fallout of the price increase and aborted plan to put DVD customers on a new service called Qwikster.

Fourth-Quarter Forecast

Streaming subscriptions are forecast to decline this month, level off in November and rebound in December to end at 20 million to 21.5 million users, Netflix said. DVD subscriptions will fall “sharply” to 10.3 million to 11.3 million customers.

Fourth-quarter profit will be $19 million to $37 million, or 36 cents to 70 cents a share, on revenue of as much as $875 million, the company said. Analysts were projecting profit of $1.10 a share on sales of $919 million, according to Bloomberg data. The company earned $47.1 million, or 87 cents a share, on sales of $595.9 million, a year earlier.

Domestic subscriber growth is particularly important because Netflix is using its wide lead over U.S. rivals to finance growth in its streaming business and expand overseas.

Netflix had projected a loss of 600,000 users on Sept. 15 to end the third quarter at 24 million. The results were in line with the average loss of 780,000 customers seen by 10 analysts in a Bloomberg survey.

Customer Turnover

Domestic churn, a measure of subscriber turnover, jumped to 6.3 percent in the third quarter from 4.2 percent in the prior three months. The company’s total subscriber count, including service in Canada and Latin America, fell to 25.3 million from 25.6 million

For the third quarter, Netflix reported net income rose 65 percent to $62.5 million, or $1.16 a share. Analysts projected 95 cents, the average of 25 estimates. Sales rose 49 percent to $821.8 million, beating expectations of $812.8 million.

Earlier today, Netflix announced it will begin selling subscriptions in the U.K. and Ireland in 2012, putting it in competition with Amazon.com Inc. (AMZN)’s LoveFilm.
Bloomberg: Subscriber loss worse than forecast, shares plunge

I'm quite chuffed they're coming to the UK early doors in 2012, I'll be interested to see if their streaming offering is more compelling than my LoveFilm subscription, which mainly gets used for DVDs & BDs.

Ray Von
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Old 10-24-2011, 06:54 PM
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Stock now down to $88 in after hours trading. 26 percent decrease after the bell.
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Old 10-24-2011, 07:20 PM
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Yikes. Hope they stabilize soon.

Quote:
Netflix Inc. (NFLX), the video-rental service, posted third-quarter user losses that were worse than its September forecast and predicted more cancellations over a price hike. The shares plunged 26 percent in extended trading.

Domestic users fell to 23.8 million as of Sept. 30 from 24.6 million three months earlier, a bigger decline than the company projected. This quarter, total domestic subscribers are forecast to increase slightly, Los Gatos, California-based Netflix said in a website statement.

The outlook suggests Netflix will fall short of the 24.9 million customers analysts project this quarter, the average of 10 estimates in a Bloomberg survey. The number underscores the fallout from a September price increase and aborted plan to force subscribers into separate streaming and DVD services.

“To show even modest U.S. subscriber growth in the fourth quarter will require significant ramp-up in Netflix’s marketing spending,”
said Paul T. Sweeney, director of research for Bloomberg Industries.
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Old 10-24-2011, 07:22 PM
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Streaming subscriptions are forecast to decline this month, level off in November and rebound in December to end at 20 million to 21.5 million users, Netflix said. DVD subscriptions will fall “sharply” to 10.3 million to 11.3 million customers.
Wow.

There are 14 million DVD subscribers now. They will lose 2.7 million to 3.7 million disc subscribers in 3 months.

That doesn't sound too good. No wonder they were trying to spin it off. Probably trying to sell the disc business off while they could get something for it.
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Old 10-24-2011, 07:23 PM
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Quote:
Meanwhile, in its zeal to upgrade quality of content to its streaming portfolio, Netflix accrued more than $539 million in licensing liabilities in the third quarter to bring its content spending through nine months to more than $1.3 billion.

By comparison, Netflix spent just $20.8 million on DVD/Blu-ray Disc content rights, or $62 million through the first nine months of the year.
You would think they could spend a little more on Blu-ray to satisfy some more vocal users complaining about their availability and que times.
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Old 10-24-2011, 08:12 PM
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Quote:
Originally Posted by mikemorel View Post
Wow.

There are 14 million DVD subscribers now. They will lose 2.7 million to 3.7 million disc subscribers in 3 months.

That doesn't sound too good. No wonder they were trying to spin it off. Probably trying to sell the disc business off while they could get something for it.
Without streaming thrown in for only 2 bucks more, Netflix DVD business is not competitive with kiosks and Blockbuster's DVD-by-mail and in-store exchange programs. I quit Netflix in 2008 due to long wait times for new release blu-rays and never looked back.

DVD-by-mail only business model will not be competitive with kiosks and dvd-by-mail + in-store exchange. For all those rare art-house flicks that used to be the Netflix's DVD library advantage do not have huge licensing fees anyway, so they can be streamed instead.

Netflix is only good for streaming, and that's what I've been using for a while.
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Old 10-24-2011, 09:37 PM
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Quote:
Originally Posted by mikemorel View Post
Wow.

There are 14 million DVD subscribers now. They will lose 2.7 million to 3.7 million disc subscribers in 3 months.

That doesn't sound too good. No wonder they were trying to spin it off. Probably trying to sell the disc business off while they could get something for it.
Are these numbers for DVD only subs? How many for DVD and streaming together?
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Old 10-24-2011, 11:05 PM
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And Hastings is still in charge...why?
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Old 10-24-2011, 11:06 PM
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What a mess. Netflix got greedy and forgot what got them where they are. What a difference a year makes..
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