As the third quarter has come to a close Netflix has had some shocking realizations. It was during the start of the third quarter that they made the announcement that they were now charging separately for DVD streaming and DVD rentals. This would result in a large price increase for consumers of the Netflix package. Despite this Netflix still was able to earn $62 million at the end of the third quarter. But this did not keep the demand of Netflix stocks from shifting. The demand curve for Netflix stocks had a severe inward shift after it announced its massive loose of subscribers. At the end of the third quarter, Netflix reported its consumer base shrinking by almost 1 million. This is the first time the consumer base of Netflix has shrank in many years and analysts say that this shrinking is not done yet. They predict that there will be an even greater loss of subscribers by the end of the fourth quarter in December. Netflix itself warns stockholders that it is not going to be profitable in the upcoming quarters. This drop in shareholders and consumers can both be explained by the law of substitutes. Many DVD rental companies are out there and for the longest time Netflix has held the most consumers. As soon as the price is increased though, we see the substitution effect take place and consumers take their money other places that are cheaper. Things like Vudu and Blockbuster offer similar services that Netflix does; now that Netflix has increased their prices, consumers are choosing the cheaper option. This increase in price of Netflix streaming and postal services also shows the effects of a price rising above equilibrium. The increased price has caused a excess supply proving that is it in fact above equilibrium.