Netflix Earnings Outlook Lowers In Light Of Recent Backlash Concerning Pricing Changes [Weeks After News Of Price Hike, Netflix Projects Earnings Will Be Less Than Anticipated]

Posted on TFTS by Tim Lenahan on Tuesday, 26. July 2011 under: Audio,Visual, Internet Highlights

Netflix has changed their pricing a bit and has received quite the backlash from its customers. They say they are planning on using the increased revenue from the price hike to improve their streaming service. Now they are projecting a lower than anticipated earnings for the third quarter because of the negative response.

Netflix says their earnings will be $800 million to almost $830 million which just happens to be lower than earlier anticipated. Reed Hastings, Netflix chief executive, doesn’t seem too worried because he anticipated at least some backlash. He knew some customers will leave or downgrade services and that revenue would go down for a little while.

According to Mr. Hastings, the price leap, DVD-by-mail going from a $2 add-on to an $8 separate package, will benefit profits in the fourth quarter. He also says they will be able to pay for improvements in research and development and content availability.

It can be a tricky job keeping streaming customers happy what with outages and Hollywood licensing issues. As the subscriber base continues to grow, Netflix is confident that improvements can be afforded.

Source