Netflix Subscriber Growth Slows

LOS GATOS: Netflix released Q2 earnings that showed it added 1.7 million subscribers in the quarter, missing its own guidance by a wide margin.

The streaming giant originally projected 2.5 million sub additions. In the same period last year, Netflix added 3.3 million new subscribers. “We are growing, but not as fast as we would like or have been,” the company stated. “Disrupting a big market can be bumpy, but the opportunity ahead is as big as ever and we continue to improve every aspect of our business.”

In the U.S., Q2 net additions were 0.16 million against a forecast of 0.50 million. International net additions in Q2 came to 1.5 million compared to the 2 million forecast. The company said it lost more members than anticipated as a result of press coverage of its plans to “un-grandfather” longer-tenured members to its new price of $9.99 per month. “We think some members perceived the news as an impending new price increase rather than the completion of two years of grandfathering,” Netflix said.

Netflix’s net income was $41 million, compared to $26 million for Q2 2015. Revenue was at $2.11 billion, compared to $1.65 billion the year prior.

“Our global expansion is an exciting opportunity that will unfold over many years,” the company stated. “Continued U.S. growth will be a part of it and there is no change to our view that in the U.S. Netflix can reach 60­ to 90 million members. We continue to expect to run around break­even on a net income basis in 2016 and to generate material profits in 2017 and beyond. We will drive operating profit growth in 2017 by reducing our international losses and continuing to grow U.S. profit.”