Video rental service Netflix has posted worse than expected customer losses in Q3 2011 and predicted more cancellations over the recent price hike. Shares in the company plunged 27% after the announcement.
Domestic subscribers dropped to 23.8 million as of September 30, down from 24.6 million just 3 months earlier. The drop was larger than expected, according to statements published on the company's website yesterday. Analysts were predicting a growth of about 300,000 members on last quarter's figures, to around 24.9 million in total.
The 27% drop sent Netflix's stock price down to $87 in extended trading after the company's third quarter results were announced, putting its market-value loss at more than $10 billion since the stock made an all-time closing high of $298.73 on July 13, according to Bloomberg.
The figures suggest that Netflix has been unable to contain the revolt felt over its price increases and the now aborted plan to split streaming and DVD content services. In a letter to shareholders dated yesterday, Reed Hastings, CEO of Netflix said the company had "greatly upset many domestic Netflix customers with our significant DVD-related pricing changes, and to a lesser degree, with the proposed-and-now-cancelled rebranding of our DVD service. In doing so, we've hurt our hard-earned reputation, and stalled our domestic growth."
He further added that the company's "long-term streaming opportunity is as compelling as ever and we are moving forward as quickly as we can to repair our reputation and return to growth."
Netflix now predicts loses for 2012 as it battles to rebuild its damaged reputation. The company also announced that it will launch its streaming service in the UK and Ireland early next year. This follows from a recent licensing deal in the U.S. with Warner Bros. and CBS to stream CW network programs.