Netflix shares fall by 10% as demand for subscribers slows

Copyright of the image
Netflix

Netflix has added fewer paid subscribers than expected over the last three months as the streaming service continues to reject price increases.

The company's shares fell 10% after Netflix added 2.7 million new customers worldwide between April and June, well below expectations.

"Our missed forecasts were for all regions, but a little bit more for areas where prices have increased," he said.

This comes as competition increases with competitors such as Walt Disney and Apple.

The company, behind such successes at The Crown and Orange is the New Black, said in its statement: "We do not believe that competition is a factor, as there has been no significant change in the competitive landscape at the moment. during the year. [the second quarter] competitive intensity and our penetration varies from region to region, "said the company.

The additional 2.7 million subscribers were far from being estimated at around five million by badysts.

"While our US members remained virtually unchanged in the second quarter, we expect a return to more typical growth in the third quarter and we see this in the first few weeks of the third quarter," said Netflix.

However, this failed to calm investors who, after normal business hours, conducted a rescue operation that had increased by almost 35% since the beginning of the year.

"Crucial months"

Netflix will lose some of its successful shows, such as Friends, in favor of competing platforms launched in the coming months, but explained that it would compensate for this with original content.

"Much of our national, and eventually global, catalog of Disney, as well as Friends, The Office, and other licensed content will disappear over the next few years, freeing up a budget for more original content." said the company.

"From what we've seen in the past when we remove important catalog content … our members are turning to the pleasure of enjoying our other great content."

Net income fell to $ 270 million in the second quarter ended June 30 from $ 384 million a year ago. Total revenue rose from $ 3.91 billion to $ 4.92 billion.

Nicholas Hyett, equity badyst at Hargreaves Lansdown, said Netflix could face tougher challenges as competition from competing streaming services intensifies.

"Performance over the next two quarters will be crucial, and it's very hard to separate from Disney and Apple, while looking for new customers," he said.