Netflix Inc shares plunged in after-hours trade on Wednesday after its quarterly update showed weaker-than-expected subscriber growth for the streaming television sector leader.
Netflix said it added 2.7 million new subscribers worldwide in the April-June period, well below expectations, as the sector prepared for offerings from rival groups, such as Walt Disney Co and Apple Inc.
The stock slid 11.97 percent to US$319.07 in after-market trade following the results, which showed revenues and profits largely in line with analysts’ forecasts.
Photo: AFP
Netflix said that it still sees long-term growth on target, dismissing concerns that consumers were gravitating to rivals.
“I think our position is excellent,” Netflix CEO Reed Hastings said in an earnings presentation.
“If investors believe in Internet television, then our position in that market is very strong,” he said.
Hastings maintained that while there might be a streaming television war going on, the market is so vast that rival services can thrive.
He quipped that many Netflix employees are fans of HBO shows.
Netflix, known for its original shows such as The Crown and Orange is the New Black, said the latest shows did not attract as many subscribers.
That, along with hikes in the price of subscriptions in some regions, appeared to dampen growth, Hastings and other top executives said.
Subscriber growth reignited in the opening weeks of the current quarter, with the release of the latest season of blockbuster original series Stranger Things, executives said.
Netflix said revenue for the recently ended quarter grew 26 percent from a year ago to US$4.9 billion and profit fell 29 percent to US$271 million.
Netflix would be losing some of its hit shows, such as Friends, to rival platforms being launched in the coming months, but argued that it would make up for that with original content.
“Much of our domestic, and eventually global, Disney catalog, as well as Friends, The Office and some other licensed content will wind down over the coming years, freeing up budget for more original content,” the company said.
“From what we’ve seen in the past when we drop strong catalog content ... our members shift over to enjoying our other great content,” it said.
WarnerMedia is to launch its new Netflix rival “HBO Max” early next year after reclaiming the rights to stream its popular TV comedy Friends, the company said on Tuesday.
The new service will enter an increasingly crowded TV streaming marketplace, vying for customers with Netflix, Hulu Inc and Amazon.com Inc as, well as the soon-to-be-launched Disney+ and Apple’s upcoming product.
Netflix said that it has no plans to add advertising to its streaming television service.
“We, like HBO, are advertising- free,” the company said.
“That remains a deep part of our brand proposition; when you read speculation that we are moving into selling advertising, be confident that this is false,” it said.
The company plans to continue investing in original content to keep and win subscribers, it said.
Netflix also revealed plans to roll out a low-priced mobile-screen plan in India to lure people to its service there.
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