Netflix CEO Reed Hastings outlined fourth quarter profits predictions in a letter sent to shareholders October 24, saying customer DVD subscriptions will decline sharply for the company due to their price changes.
“Our weekly rate of DVD cancellation is steadily shrinking, as the price effect washes through, and in future quarters we expect DVD subscriptions to shrink more modestly,” said Hastings.
Netflix’s third quarter earnings announcement was accompanied by news that the movie retailer also lost over 800,000 customers. The company’s fourth quarter outlook predicts 10.3 million to 11.3 million domestic DVD subscriptions.
“We still expect DVDs to last a long time, as they serve some unique needs for completeness, for simplicity, and for those households without access to high speed broadband,” Hastings told investors.
This September, Netflix announced that the movie service would transform its service offering, splitting physical rentals and online streaming into two separate brand products at lower price points. But that plan, along with Netflix DVD brand Qwikster, was killed in early October after numerous customer complaints.