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Netflix’s price hike has it losing way more customers than expected

Netflix price hike

Netflix just released numbers from the second quarter of 2016, which gives us our first look at how customers are responding to a price hike for older Netflix members. Prices are up from $7.99 to $9.99 for many people, and Netflix has seen its slowest growth ever in the US, adding 340,000 fewer subscribers than expected.

As you’d expect, the news has seen Netflix’s stock price tank, but the streaming giant is sticking to its guns.

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Netflix’s forecast said that it expected to add two million subscribers internationally, and 500,000 in the US. Instead, it added 1.5 million internationally and 160,000 in the US.

In a statement, the company blamed this on an uptick of “churn,” which is a technical way of saying old customers leaving. Netflix is blaming the exodus on “press coverage in early April of our plan to un-grandfather longer tenured members,” which is a nice way of saying that the media pointed out that many people would start paying more money.

Nonetheless, Netflix says that its price hike is still justified. It thinks that in the long term, the extra cash will enable it to buy more content (and produce more original series), which will drive growth.

That may be true in the long term, but the short-run prospects for the company are much worse. In addition to disappointing numbers for Q2, Netflix expects to add 300,000 U.S. subscribers and 2 million overseas in Q3. That’s less than half the numbers analysts were expecting. As a result, Netflix’s stock is down 14 percent in after-hours trading.

Whether this is really a temporary blip or a major mis-step from Netflix will take years to work out. But it’s a rare piece of bad news for the company that’s been dominating movie streaming since well before Netflix and Chill was even a thing.