Though Netflix’s Q2 net income surpassed expectations, there is no doubt, and even Netflix admits this, that with the price increase on their services will take a toll in their Q3 earnings, as many of their current subscribers are outraged by it.
“(They’ve) unbundled their services,” Jason Cochran, contributing editor for DealNews.com said. “It used to be you pay you pay $10, have streaming movies unlimited and also be sent DVDs. Now if you want them you have to pay for them separately. If you want to keep the old services you had, pay $16 a month, rather than $10, does not make people happy.”
Analysts are not so worried about Netflix’s status, as they share the belief as Netflix Chief Executive Reed Hastings that the expected Q3 downfall will just be a minor setback for the company, but a setback needed for the company to grow.
This statement could be a prelude to Netflix possibly letting go of their DVD rental service, shifting focus to primarily a streaming service. More users are now into video streaming on their handheld and portable devices.
And for Netflix, this really is a minor setback. The streaming video service has just announced a deal with CBS for a two-year, non-exclusive licensing agreement that will enable subscribers from Canada and Latin America to view shows of CBS like 90210, Californication, Dexter, United State of Tara, Numb3rs, Sleeper Cell and Twin Peaks for $7.99 per month.
“We are delighted to be expanding our successful relationship with CBS to our newer markets in Canada and Latin America,” said Ted Sarandos, Chief Content Officer of Netflix. ”We aim to provide the widest possible range of great TV shows so our members can always find something compelling to watch wherever and whenever they want.”
Netflix is proving that investors have nothing to worry about and that their price increase will soon be embraced by subscribers as an upgrade and not a hindrance.