For many people who were saving on cable bills and replacing it with netflix, it is a big increase. A lot of subscribes bought into the netflix idea because it was cheap. For someone that watches it once or twice a week, they may reduce the service of just switch to other internet streaming options and/or Redbox. You can stream quite a bit of content from the internet for free.
I think they will lose a lot of subscribers, but they probably did a survey and figured out that that pricing point would give them maximum profits. If they could afford to do it, they would have created less ill will if they increased prices by 10%/year for a while. Either way, I am not recommending netflix to anyone anymore. This should give a boost to services that aggregate free video content. No idea where the stock price will go, but perhaps it is fully priced and now earnings will have to catch up to the high valuation, before it goes much higher.