Netflix regaining subscribers after fleeing last year

A U.S. Postal worker holds a stack of Netflix envelopes at the U.S. Post Office sort facility. Netflix lost a lot of subscribers a few months ago when it tried to break its mailing business off from its streaming service. Now, it is gaining those customers back.

Jeremy Hobson: After trading wrapped up on Wall Street yesterday, we found out how Netflix did at the end of last year. The headline number: $41 million in profit. Not all that impressive for a big company like Netflix. But what is impressive is that the subscribers are coming back after fleeing last year over a price increase.

And as Marketplace's Jennifer Collins reports, the new customers are doing just what Netflix wants them to do. They're signing up to stream video online.

Jennifer Collins: Last year Netflix hiked its prices by as much as 60 percent, and moved to split off its famous dvd-by-mail services from streaming video. Subscribers were not happy -- 800,000 people cut ties with Netflix. But now nearly all have returned.

Ken Doctor: People forget. They don't like it. There's a protest. They use their feet and walk away, but then they forget and move on.

Ken Doctor is a media analyst with the consulting firm Outsell. He says Netflix got ahead of its customers. But now its subscribers have caught back up. They're starting to choose streaming over old fashioned DVDs. But he says that success presents Netflix with a new problem. It's known for all those DVDs you can get in the mail. It's streaming library isn't nearly as deep.

Doctor: The next customers dissatisfaction to look at is: Are there enough movies to keep me paying a subscription price to Netflix for streaming?

Plus Netflix isn't the only company to realize the potential of streaming. It's already facing competition from Hulu. And Netflix says Amazon is planning to compete directly with them.

I'm Jennifer Collins for Marketplace.

About the author

Jennifer Collins is a reporter for the Marketplace portfolio of programs. She is based in Los Angeles, where she covers media, retail, the entertainment industry and the West Coast.

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