10.0 Streaming only vs. 9.8 now expected 3.0 DVD only vs. 2.2 now expected 12.0 Combined vs. 12.0 now expected Total 25 vs. 24 now expected.
The higher priced Combined Streaming & DVD option being unchanged at 12M is a surprise as it was the only package that went up in price, generating higher margins.
The DVD only option saw a 20% reduction in price, yet expectations for this lower priced product are now lowered by 800K from 3M estimate. This was the product with the lowest margins and the one that NFLX was targeting to shake out.
The Streaming only option shows a minor reduction of 200K subs from original 10M estimate and maintains the highest margins.
This new mix of higher priced & higher margin subs should result in higher EPS - note financial guidance is unchanged.