There are consequences for any online service raising its prices, and DVD-by-mail and video streaming company Netflix appears to understand that. Netflix has announced it is lowering its U.S. subscriber expectations for the third quarter because it anticipates customer losses relating to the company's split in July of its DVD and streaming options (which effectively raised prices for existing customers who both receive DVDs by mail and use the streaming option.) As a result, Netflix shares dropped 16 percent in pre-market trading today.

The company said today that it now expects 21.8 million subscribers for its streaming-only service and 14.2 million subscribers to get DVD plans, the Associated Press (News - Alert) is reporting today. That's slightly down from an estimate of 22 million streaming customers and 15 million DVD subscribers made in July of this year. The company is forecasting the largest subscriber decline in its DVD-only plans, anticipating that more subscribers value Netflix's instant watch video streaming service. Estimates of DVD-only plans declined to 2.2 million from 3 million.

The company is, however, remaining firm in backing its forecast for international subscribers – the company has begun offering streaming-only service outside the U.S. – and overall third-quarter earnings. Last fall, Netflix announced streaming-only service in Canada (the company appears unwilling to deal with foreign postal services for DVDs-by-mail). In July of this year, the company said that by the end of 2011 it would expand streaming-only to 43 countries and territories in Latin America and the Caribbean, offering video content in English, Spanish and Portuguese.

On September 5, Brazil became the first country in Latin America to introduce the service, followed by Argentina on September 7, Chile on September 8 and Colombia on September 9, with the rest of the continent expected to follow with service in the next few weeks.

Despite the revision, Netflix has said, it still believes the pricing split was the correct thing to do.