nmpost writes with one interpretation of Netflix's Q2 results (PDF). From the article: "The beginning of the end may be at hand for Netflix. On Tuesday, the movie rental company posted its second quarter results, and they were not promising. While the company returned to profitability following a first quarter loss, Netflix had a 91% drop in net income. The company's troubles began when it attempted to split its DVD-by-mail and streaming services, effectively doubling the price it was charging customers. External forces are now beginning to weigh on the company, and its doom appears to be within sight. The biggest challenges facing Netflix over the coming months are going to be competition and licensing fees. Three huge companies are competing against Netflix in the streaming arena, which has already surpassed its DVD-by-mail business. Amazon, Apple, and Google all offer streaming content as well. As movie and television studios began to demand higher licensing fees, Netflix will not be able to pay, while these tech giants will. Netflix will eventually be priced out of the market." Engadget, on the other hand, shines some positive light on the report: "The results are in from its Q2 2012 earnings report, and it's claiming 27.56 million streaming subscribers worldwide, up from 26 million last quarter. In the US alone that includes 23.94 million customers, after it reported 23.4 million in Q1, while DVD customers dropped by 850k to 9.24 million." So it appears that Netflix is either gaining new streaming customers, or converting those expensive DVD customers into more lucrative streaming-only customers.
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