You will be redirected back to your article in seconds

Netflix cuts 3Q estimates

Subscribers balk at split pricing, exit

Netflix has lowered its subscriber estimates for the third quarter by 1 million, the first sign that the consumer backlash over its drastic price changes is negatively impacting the Web streaming/rental service. The warning caused its stock to plunge 19%, or $39.46, to close at $169.25 on Thursday.

In a note to investors, the company lowered the expected number of DVD-only customers from 3 million to 2.2 million, while ratcheting down the number of projected streaming customers from 10 million to 9.8 million. The number of customers using both services is expected to remain unchanged.

Netflix reiterated its financial guidance for the quarter, though — and noted international subscription numbers were not expected to change.

“Despite the guidance revision, we remain convinced that the splitting of our services was the right long term strategic choice,” the company said in a statement. “We know our decision to split our services has upset many of our subscribers, which we don’t take lightly, but we believe this split will help us make our services better for subscribers and shareholders for years to come.”

Popular on Variety

Even with these assurances, the news clearly rattled investors.

In July, Netflix made the controversial decision to separate subscription fees for its streaming and DVD rental service, effectively raising the rates for people who subscribed to both by 60%.

Customers voiced their displeasure, but the company has stood firm, insisting that the revenue boost will allow Netflix to spend more on its streaming service, both in terms of securing deals with studios and in R&D.

Analysts and investors, however, fear the subscription declines in the third quarter could pose a risk to any fourth quarter growth, which could put added pressure on the company.

The lowered subscription forecast comes on the heels of more bad news for the company. Earlier this month, Starz ended talks to renew its deal with Netflix. If that can’t be worked out, newer movie titles from Sony and Disney will be removed Feb. 28.

More Film

  • ‘Gravedigger,’ ‘Zanka Contact,’ ‘Sweet Annoyance’ Win

    ‘The Gravedigger,’ ‘Zanka Contact’ and ‘Sweet Annoyance’ Win Top Prizes at 2nd Atlas Workshops

    Djibouti’s “The Gravedigger,” Morocco’s “Zanka Contact” and Ethiopia’s “Sweet Annoyance” were among the major winners in the post-production and development categories of the second edition of the Marrakech Film Festival’s Atlas Workshops. “The Gravedigger,” by Khadar Ahmed, and “Zanka Contact,” by Ismaël el Iraki, won the top awards – €20,000 ($22,000) and $11,000 respectively – [...]

  • Robert De Niro, Martin Scorsese and

    Film News Roundup: Leonardo DiCaprio Presenting Robert De Niro SAG Life Achievement Award

    In today’s film news roundup, Leonardo DiCaprio will present Robert De Niro with his SAG Life Achievement Award, the Oliver Sacks documentary finds a home and UCLA’s School of Theater, Film and Television gets a new dean. AWARD PRESENTATION Leonardo DiCaprio has been selected to present Robert De Niro the SAG Life Achievement Award  at [...]


    ‘Karnawal,’ ‘Restless,’ ‘Summer White,’ ‘Firsts’ Win Big at Ventana Sur

    BUENOS AIRES  — With Ventana Sur now firing on multiple cylinders, featuring pix-in post or project competitions for not only art films but also genre pics and animation – two sectors embraced by young creators in Latin America – “Karnawal,” “Restless,” “Summer White” and  “Firsts” proved big winners among Ventana Sur’s arthouse and animation competitions, [...]

  • (center) George MacKay as Schofield in

    From "1917" to "Jojo Rabbit," Composers of Some of the Year's Top Scores Talk Shop

    “1917,” Thomas Newman The 20-year collaboration of director Sam Mendes and composer Thomas Newman has encompassed midlife crisis (“American Beauty”), crime in the Depression (“Road to Perdition”), the Gulf War (“Jarhead”), marriage in the 1950s (“Revolutionary Road”) and two James Bond adventures (“Skyfall,” “Spectre”). Now they’ve tackled World War I, with “1917,” but Mendes’ much-talked-about [...]

  • Billy Magnussen Aladdin

    'Aladdin' Spinoff With Billy Magnussen's Character in the Works for Disney Plus

    Disney is developing a spinoff of its live-action “Aladdin” with Billy Magnussen reprising his Prince Anders character. The unnamed project is in early development for the studio’s recently launched Disney Plus streaming service. Disney has hired Jordan Dunn and Michael Kvamme to write a script centered on the haughty Prince Anders, one of Princess Jasmine’s [...]

  • ROAD TRIP – In Disney and

    Disney Boasts a Bevy of Hopefuls for Oscar's Original Song Race

    When the Academy announces its shortlist for song nominations on Dec. 16, you can be certain that at least one Disney song will be on it and probably more. Disney songs have been nominated 33 times in the past 30 years, winning 12 of the gold statuettes. This year, the studio has at least four [...]

  • Innovative Scores Elevated the Year's Documentaries

    Innovative Scores Elevated the Year's Documentaries

    It’s next to impossible for a documentary score to be Oscar-nominated alongside the dozens of fictional narratives entered each year. But it did happen, just once: In 1975, composer Gerald Fried was nominated for his music for “Birds Do It, Bees Do It,” a documentary on the mating habits of animals. Fried, now 91, perhaps [...]

More From Our Brands

Access exclusive content