Netflix’s third quarter numbers have been a disappointment due to lower than expected new subscribers. Despite picking up 3.02 million subscribers and bringing in $1.4 billion, the company is seeing much lower returns than expected. Netflix had predicted 91 cent per share profit for this quarter but ended up with a much lower profits at 44 cents per share. The CEO of Netflix, Reed Hastings, blamed the unexpectedly low new subscriber numbers on a $1 price hike instituted by Netflix earlier this year. Despite the price hike, subscription numbers were higher than expected earlier this year with 1.7 million new members. The second quarter numbers were likely bolstered by the good reception of the second season of the popular Netflix show Orange is the New Black. Investors are worried about Netflix’s ability to maintain subscription growths moving forward.
Netflix officials are not worried. The company still expects 4 million new subscribers in the fourth quarter. More than 2 million of the new subscribers are expected to be overseas following the launch of Netflix in 6 European countries earlier this year. Over the year Netflix has seen a 20% increase in stocks, but the company may begin to worry as competition picks up in the TV streaming business. HBO has announced that it will be providing HBOGo, its online streaming portal, as a standalone option. This combined with existing competition, like Hulu, Netflix will be looking for new ways to grow their customer base. The company is already working on deals with major networks for streaming rights to iconic shows like Seinfeld. Netflix executives say they are not worried about the HBO announcement.
Many people will subscribe to both Netflix and HBO since we have different shows, so we think it is likely we both prosper as consumers move to Internet TV,” the executives wrote.
Read More – Netflix Shares Tumble On Disappointing Subscriber Growth (Forbes, Tom Huddleston, Jr.)