Netflix loses 800K customers in third quarter
Netflix received its fair share of criticism for its handling of both its pricing and organization earlier this fall, and it’s starting to see the ramifications. The stock of the popular online movie rental service dropped 36 percent in early trading on Tuesday after losing 800,000 subscribers in the third quarter, CNN Money reports.
Although Netflix earned an impressive $62 million during the third quarter, its success has not been reflected in its share prices. In mid-July, a share of the company was worth more than $300, but has shrunk to around $77.
The reason for the sharp decline can be tied almost directly to the mishandling of a change in policy several weeks ago. The first sign of trouble came when Netflix announced it would begin charging separate prices for its streaming and DVD-by-mail services.
The situation was only made worse when the company announced it would be splitting the two services into separate websites, with Netflix offering just streaming movies and a new website, Qwikster, for mailing. Though the company quickly reversed course, the damage has been done.
Chief executive officer Reed Hastings has received the bulk of the criticism for the mishandling of the situation. However, he has maintained that he will not step down from his post and believes Netflix will be able to rebuild its customer base simply by boosting its service.
“Our streaming marketing has been very effective in the past two years,” Hastings told Bloomberg. “We are going to work on improving the user interface, expanding to more platforms and delivering more content. There’s no grand gestures, there’s just a lot of steady and intense efforts.”