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Netflix shares down after losing 800,000 customers

Marketplace Staff Oct 25, 2011
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Netflix shares down after losing 800,000 customers

Marketplace Staff Oct 25, 2011
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Jeremy Hobson: Netflix shares are down 37 percent in pre-market trading this morning after a disappointing earnings report released after stock markets closed yesterday. The company said it lost 800,000 customers in the last 3 months as it tried and failed to spin off its DVD-by-mail business and force customers to stream video online.

For more, let’s bring in Marketplace Tech Report host John Moe. He’s with us live. Good morning.

John Moe: Good morning.

Hobson: So John, the problems with Netflix — we’ve talked about, they’ve been widely known — why this sudden drop in confidence overnight?

Moe: Well, I mean, Netflix actually had a nice increase in revenue in these results, but it’s that drop in subscription that freaked out investors. And when you’re freaked out or upset, Netflix is an easy service to cancel. If you’re mad at Bank of America, leaving takes a long time and a lot of hassle.

So as people got mad about the pricing changes and the split and the hole Qwikster debacle, they could just ditch. And that means also, of course, that people could later come back just as easily.

Hobson: Who benefits from a weaker Netflix? Are people going back to cable? Are they going to Hulu Plus and places like that?

Moe: Well, the stock’s weak, but the company still has almost 24 million subscribers, and just expanded to England. Hulu Plus hit a million subscribers recently — earlier than expected. But Hulu Plus and Netflix aren’t really an either/or proposition; one has more recent shows, one has a bigger catalog. They’re only 8 bucks a month each. And I think most people kept cable even with Netflix, so they probably never left.

And, as for all the other competitors, this shows it’s still an open market. If you can bring the best selection and low prices, and make it easy and not give people migraines, you’ll get customers.

Hobson: John Moe, host of the Marketplace Tech Report, thanks so much.

Moe: Thank you.

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