Buoyed in part by its recent international expansion, Netflix said it added 6.47 million subs in the U.S. and abroad in the first quarter of 2016, surpassing its prior high water mark of 5.59 million in Q2 2015.
Broken down further, Netflix ended Q1 with 46.97 million U.S. streaming subs. It added 2.23 million in the quarter, down slightly from additions of 2.28 million in the year-ago period. It’s forecasting Q2 U.S. streaming net adds of 500,000 to extend that total to 47.47 million.
On the international front, Netflix added 4.51 million streaming subs, extending that total to 34.53 million. It’s forecasting international sub adds of 2 million, which would expand that total to 36.53 million.
“Of our 81.5 million members, 42% are now outside the US,” Netflix noted in its letter to shareholders (PDF), attributing Q1 performance in part to the launch of several series, including Making a Murderer, Fuller House, House of Cards season four, and Daredevil season two. "Our forecast for the quarter was low (at 1.75 million) because we underestimated the positive acquisition impact of our major original content debuts."
As for its U.S. Q2 forecast of 500,000 net adds, Netflix said that’s in line with prior years that take into account a “modest impact from the beginning of un-grandfathering.” (Netflix is about to move grandfathered subscribers to its $9.99 monthly price point for its most popular baseline service tier, a move that some analysts and industry observers believe will lead to a slowdown of subscriber gains.)
Update: That anticipated subscriber slowdown caused Netflix shares to drop. On Monday, Netflix shares closed down $3.11 (2.79%) to $108.40, and were down 9.36% ($10.15) to $98.25 in pre-market trading Tuesday.
Netflix noted that more than half of its U.S. subs pay $7.99 or $8.99 for its current $9.99 HD two-screen plan. Netflix said it will phase out this grandfathering gradually throughout 2016, rather than mostly in May “so we can learn as we go.” Netflix will take the same approach internationally.
“We expect only modestly increased churn from un-grandfathering, partially because members have been with us for a reasonable period already, and because our content continues to improve,” Netflix said.
As for a hoped-for push into China, Netflix said conversations are ongoing, but has “no material update on our approach or timing.”
Looking ahead, Netflix noted that Q2 will be its first foray into the talk show genre with Chelsea, starring Chelsea Handler, which will premiere new episodes nightly, three nights per week.
In the video tech arena, Netflix confirmed that it has begun to offer some content in High Dynamic Range, starting with season one of original series Marco Polo. To get that, subs need an HDR-enabled TV and take Netflix’s $11.99 per month, four-screen Ultra HD/4K plan.
More to come...
The smarter way to stay on top of the multichannel video marketplace. Sign up below.
Thank you for signing up to Multichannel News. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.