Netflix Loses 1M Subscribers Because of Price Hike

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This is clearly the season of Netflix’s discontent.

In case anyone – and I’ll include myself amongst this – thought that the most Netflix’s price hike would produce would be grumbling and online discontent, yesterday’s announcement by the company that it estimates a one million subscriber drop as a result came as quite a surprise. And, as if that wasn’t bad enough, the market’s reaction to the news didn’t help matters, with share value dropping 19% in one day.

(MORE: Why Netflix’s Price Hike Doesn’t Bother Me)

When adjusting subscriber estimates for Q3 2011 from 25 million to 24 million, Netflix made a point of saying that its financial projections for the quarter will not be affected by the loss. Nonetheless, shares fell $39.46 to $169.25 on Thursday after the announcement, taking it to a point lower than where it was at the start of 2011.

Around 80% of the loss is estimated to have come from subscribers who only used Netflix’s DVD rental service. In a statement to investors, the company said that it knew that the decision to raise pricing and split services had “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.” All they need now is for subscribers and shareholders to agree with them.

MORE: Netflix Shakes Up Plans: $8 for Streaming, Another $8 for DVDs

Graeme McMillan is a reporter at TIME. Find him on Twitter at @Graemem or on Facebook at Facebook/Graeme.McMillan. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

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