Netflix shares are down over 27 % after hours.
The good news -- earnings of $62.5 million, or $1.16 a share, up from last year and beating expectations -- is being drowned out by the number of subscriber defections, about 800,000 from Q2 to Q3.
The Los Gatos-based company took the unusual step of offering a "Letter to Shareholders" (pdf) along with its earnings release.
"The last few months have been difficult for shareholders, employees, and most unfortunately, many members of Netflix...(W)e greatly upset many domestic Netflix members with our significant DVD-relating pricing changes, and to a lesser degree, with the proposed-and-now-cancelled rebranding of our DVD service," the letter says.