By Dan Frommer. From the 
archives.
Tuesday, October 25, 2011 at 6:17 pm.
Netflix: 10 years in 3 charts
Netflix’s subscriber loss last quarter was so rare that it had only happened once before during its span as a public company.
Netflix IPO’d in May 2002, steadily gaining subscribers every quarter until Q2 2007, when it lost 55,000, finishing June with 6.7 million. In the company’s earnings release (PDF), Netflix founder and CEO Reed Hastings blamed the loss on “intense competition,” and lowered prices.
Back then, Blockbuster was the enemy. Today, the enemy is Netflix itself. Price increases and a ham-fisted attempt to spin off its DVD business as a separate service called “Qwikster” cost Netflix 800,000 U.S. subscribers last quarter. That doesn’t sound too bad until you note that Netflix had gained an average of 2.4 million subscribers per quarter over the previous year.
Will it happen again this quarter? Netflix has warned that it could, as more DVD customers flee while Netflix focuses on the streaming video market. Thinking long-term, Netflix is making the right moves. But in the short-term, it hurts. Netflix shares closed down another 35% today and have lost 3/4 of their value since July.
A few more quick facts:
- Today, the average Netflix subscriber spends $11.56 per month on service — down more than 40% from 10 years ago, when it was around $20. (The gaps in the yellow line in the chart above are during periods when Netflix didn’t disclose this stat.)
- Netflix currently spends an average $15.25 to acquire each new subscriber, down from a peak of almost $48 in early 2007, when the DVD rental market was most competitive.
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