Things have not been going well for Netflix. The company miscalculated how its user base would respond to its price hike, and thought that the threats to jump ship were just that—idle threats. It had told investors that in the long run, not only would its users remain loyal, but that its user base would grow this quarter by 400,000 new subscriptions in the U.S. As the Sept. 30 cut-off date looms, it looks more like it will lose as many as 600,000 U.S. subscribers instead.
Chief Content Officer Ted Sarandos said on Thursday that the ability to predict how customers will react to price hikes is “something we’ll get better at.” This was no consolation to investors, many of whom felt like the Netflix era was nearing a close. Stock prices plummeted 19 percent, closing at $169.25, which is $39.46 less than when they opened.
This follows a 9 percent stock price drop just two weeks ago, after Starz announced that it will not be renewing its contract with Netflix, when it expires on Feb. 28. The announcement means that Netflix will no longer have almost instant access to films by such major studios as Disney and Sony, and contributed to the drop in subscriptions. Users were concerned not only that they will be paying more, but that there will get less content for their money.
To make matters worse, Netflix is also facing a challenge from a group of citizens in Los Gatos, who are concerned about the company’s plans to expand its corporate headquarters there. On Wednesday, a group called the Los Gatos Citizens for Responsible Development filed suit in the Santa Clara County Superior Court demanding that an Environmental Impact Report be issued before construction begins on the new headquarters. Attorney Rachel Mansfield-Howlett said, “It’s important for people to understand the citizens’ group does not wish to stop the project. We’re just seeking environmental review.”
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