Netflix faces growing US competition as growth slows

The value of US shares in video streaming service Netflix have fallen after subscriber numbers failed to reach forecast targets

This Article Covers

Mobile software

The value of US shares in video streaming service Netflix fell after subscriber numbers failed to reach forecast targets.

The company reported 3.02 million new subscribers around the world in the third quarter, about 670,000 fewer than expected at the start of the quarter.

Shares fell by up to 27% on the Nasdaq index on news of the slower-than-expected growth, according to the BBC. Netflix's stock price fell to $331 in after-hours trading from its closing price of $448.59.

Netflix blamed a $1 increase in its US monthly service fee, now $8.99, for the slowdown in new subscribers.

Although operating in nearly 50 countries, the biggest market for Netflix is the US, where customer growth fell by 24% to 980,000 in the third quarter compared with the same period last year.

The company had predicted it would add 1.33 million US customers in the quarter.

Netflix expects slower domestic growth to continue in the fourth quarter, projecting 1.85 million new customers, compared with 2.33 million in the fourth quarter of last year.

In addition to slowing US growth, Netflix is facing growing competition in the domestic market, with rival Time Warner's HBO to launch an online streaming service in the US in 2015.

However, Netflix responded to the news by saying there is enough room in the market for customers to use both services because the two offer different content.

"It is likely we will both prosper as consumers move to internet TV," Netflix said in a statement.

Netflix reported a profit of $59m, up from $32m a year earlier. But it forecast a 44% drop in earnings in the fourth quarter, compared with the same period in 2013, as losses in its international segment widen due to its aggressive European expansion, reported the Wall Street Journal.

Netflix reported 2.04 million international subscribers, missing its estimate by 320,000. However, the company reported narrower-than-expected losses of $31m, the paper said.

In September 2014, Netflix launched in six additional European countries, including France and Germany, and had cautioned earlier that the expansion could lead to segment losses of up to $42m in the quarter.

CW+

Features

Enjoy the benefits of CW+ membership, learn more and join.

Read more on Mobile apps and software

Start the conversation

Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

-ADS BY GOOGLE

SearchCIO

SearchSecurity

SearchNetworking

SearchDataCenter

SearchDataManagement

Close