Netflix Executives Admit to ‘Miscalculating’ Price Change Reaction

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In a letter to investors, Netflix CEO Reed Hastings reported that he expected to lose 600,000 subscribers this quarter, thanks to the much-maligned recent change in the company’s pricing structure. As the bad news sent Netflix stock down 19 percent, another executive, Ted Sarandos, tried to do some damage control, telling reporters that, “It was a sexy headline to say there’s a 60% price increase, but that was only for people who want both [streaming and DVDs.]” However, he did admit to “miscalculating” the public’s reaction to the shift. To be fair, as one analyst put it: “Netflix can test the impact of new pricing plans on new subscribers, but it can’t easily test the impact on the installed base of a pricing change.” Sure, but it’s still difficult to see how the service, which apparently expected to gain 400,000 subscribers this quarter, failed to anticipate a negative response to a price hike, no matter how well-reasoned it is. [LAT]

Netflix ‘Miscalculated’ Price Change Reaction