Netflix Doesn’t Hit Q3 Subscriber Targets, Blames Price Increases
After topping 50 million global subscribers in Q2 2014, Netflix has added another 3 million since. In its Q3 earnings letter to shareholders, Netflix said it now has 53.1 million global subscribers, helping the company generate $1.22 billion in revenue.
In the US, Netflix grew to more than 37.2 million subscribers. While 1 million more than the number of domestic subscribers Netflix had at the end of Q2, growth is down when compared to the same time period last year. At the end of Q3 2013, Netflix had reported 1.3 million net US subscriber additions.
The company also missed its projection. It had predicted 37.6 million US subscribers by the end of Q3.
The reason for slower growth? Netflix said it’s the decision to raise prices earlier this year. “Slightly higher prices result in slightly less growth, other things being equal, and this is manifested more clearly in higher adoption markets such as the US,” wrote CEO Reed Hastings and CFO David Wells in the shareholder letter.
Domestic streaming revenue in Q3 was $877 million (+25% year-over-year) — in-line with Netflix’s projections, the company said, though revenue growth outpaced subscriber growth, again as a result of that price increase.
Internationally, Netflix added 2 million subscribers, raising its total to more than 15.8 million. That was another miss, as Netflix’s projection was 16.16 million international subscribers by the end of Q3.
None of this is helping its case on Wall Street, where the company’s stock is already down more than 25% in after-hours trading.
Looking ahead, Netflix projects 4 million more subscribers in Q1, with the hopes of ending 2014 with more than 57 million across the globe.
More to come, and here it is.Tags: David Wells, Netflix, Q3 2014 Earnings, Reed Hastings