A loss of 400,000 subscribers is quite significant; there's no spinning it or putting a coat of icing sugar on that. Having said that, however, that figure - as others have pointed out - was cited before patch 1.2 went live and we're all left wondering how many new subscribers came to the game at that time and how many re-subscribed.
1.3 million is still a very good figure for a game only five months old. Not to compare it to that "other game" but World of Warcraft boasted 1.5 million subscribers after four months of going live (http://internetgames.about.com/b/2005/03/18/15-million-world-of-warcraft-subscribers-globally.htm). I wonder how many people left World of Warcraft after the first subscription cycle ended only to come back after a major content update or two.