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Netflix Subscriber Slowdown, Price Hike to Blame?

Photo of PS3 XMB with Netflix App
Sean Fang Fri, 22/07/2016 - 14:07

Netflix grew at a much slower rate than anticipated in the second quarter, causing the company's stock to fall by more than 15 percent at one point.

Instead of gaining 500,000 new users in the U.S, as expected by both Wall Street and Netflix themselves, the streaming giant only gained 160,000 new users. Internationally, Netflix's 1.52 million new subscribers was below the 2.15 million expected by Wall Street.

The slower subscriber growth may be related the price increase some users faced due to the expiration of their grandfathered pricing. Netflix acknowledged this in their letter to shareholders, but insists that it was confusion on the part of subscribers, and that the price increase wasn't really a price increase.

"Gross additions were on target, but churn ticked up slightly and unexpectedly," Netflix confirming that the slowed growth was more to do with more users leaving, as opposed to less users signing up. "We think some members perceived the news as an impending new price increase rather than the completion of two years of grandfathering, it's entirely possible there was confusion on the part of readers and subscribers," writes Netflix.

In addition, Netflix has issued guidance for the next quarter that is also below what Wall Street was expecting, with U.S. growth capped at 300,000 (compared to Wall Street's 695,000), and 2.0 million new international subscribers (Wall Street: 2.54 million).

HBO on the other hand delivered a strong set of results, with "record viewership" being recorded for its shows. It's new digital platforms have also been well received, with 'Game of Thrones' season six viewership on HBO Go and HBO Now up 91% from the previous season.

[via Arstechnica, sfist, Business Insider]

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