Netflix's decision to raise the price of its movie and TV episode rental service is officially costing the business more subscribers than it originally thought. Last July it announced that customers who use both the streaming video service and the DVD mail order service would see their monthly prices go up by 60 percent, which resulted in a massive outcry from many of those customers. Those price increases went into effect this month for new subscribers. Today Netflix issued a financial update which it showed via the chart above that it will have a total of 24 million domestic subscribers this quarter. That's 1 million less subscribers than it predicted it would have back in July.
The loss includes 800,000 fewer DVD mail order customers and 200,000 fewer streaming video subscribers. Oddly the number of people who use both, the same category that suffers from the big price increase, will stay the same at 12 million.
In its update today, Netflix defended its decision to change its business model despite the subscriber loss, saying, "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." It did not speculate on any other reasons behind the lowering of the subscriber numbers. However, it did say that its financial guidance for the current quarter remains the same as is its international subscription numbers. Netflix's stock price is plunging by over 15 percent at the moment.