The decision comes soon after Netflix hiked its rates and separated its video streaming and DVD subscription plans. As the graphic below shows, the bulk of the lowered guidance originates from customers who only rent DVDs from the company.
The reduced U.S. subscriber projection didn't affect Netflix's financial guidance or its international subscriber forecast, but, in a letter to shareholders, reiterated its belief that the separation of its subscription tiers will help it "improve our global streaming service even more rapidly, because it is not meshed with a domestic DVD business."
But Netflix likewise acknowledged that the decision to split its services "has upset many of our subscribers."
Why this matters
Many were expecting Netflix to cut domestic subscriber guidance after it announced the new plans and rate hikes, but Thursday's confirmation represents yet another patch of turbulence for a high-flying company that's been striking fear into MSOs and other pay-TV operators.
Among other recent setbacks, Netflix's Watch Instantly service will lose access to coveted Starz Entertainment LLC content when their deal expires on Feb. 28, 2012. It's believed that Starz walked away from a $300 million-plus deal after Netflix would not agree to offer the programmer's content in a pricier tier that would placate Starz's pay-TV affiliates. (See Did Starz Reject $300M Netflix Offer?)
Netflix shares were down $28.31 (13.61 percent) to $180.30 each in early trading Thursday.
Get caught up on Netflix.
- How Much Is Netflix's Traffic Worth?
- Netflix Goes South
- Netflix Could Pay Big for Starz Renewal
- Most Netflix Subs Stream to TVs
- Netflix Rate Hikes Will Hammer Growth
- Netflix Subs Revolt
- Netflix: The Internet's US Traffic King
— Jeff Baumgartner, Site Editor, Light Reading Cable