Netflix pushed past 53 million streaming subs worldwide in the third quarter as it paired slower U.S. subscriber growth with solid gains on the international front, but missed its overall forecast. And the streaming giant had some opinions to share on HBO's plan to offer a standalone over-the-top service in 2015.
Netflix added 3.02 million streaming subs in the period, missing its forecast of 3.69 million additions, ending the third quarter with 37.22 million domestic streaming customers and 15.84 million international subs. Netflix added about 1 million new U.S. streaming members, and 2 million international streaming subscribers during the quarter. Following the subscriber miss, Netflix stock was down $114.59 (25.54%) to $334.00 in after-hours trading Wednesday.
Netflix posted third quarter revenues of $1.22 billion, versus $884 million in the year-ago quarter. Its domestic business contributed a profit of $251 million, while its international business contributed a loss of $31 million, narrowed considerably from a loss of $74 million in the year ago quarter.
The company added 1.3 million U.S. streaming subs in the year-ago quarter, and attributed that partly to a price increase announced in May that affected new Netflix customers.
“In hindsight, we believe that late Q2 and early Q3 the impact of higher prices appeared to be offset for about two months by the large positive reception to Season Two of Orange is the New Black,” the company said in its letter to shareholders. “We remain happy with the price changes and growth in revenue and will continue to improve our service, with better content, better streaming and better choosing. The effect of slightly higher prices is factored into our Q4 forecast.”
Looking ahead, Netflix said it expects to pull in fourth quarter streaming revenues of $1.3 billion and add 4 million subscribers, a figure that would extend its grand total to 57.06 million (39.07 million domestic and 17.99 million international). Netflix also expects domestic streaming to contribute profits of $260 million in the fourth quarter paired with an expected loss of $95 million from its international streaming business.
"Since our per-member viewing and retention in the US are as strong as ever , we don’t think increased competition from piracy, TV Everywhere, Amazon Prime Instant Video, Hulu, etc, is a major factor." the company said.
Speaking of the competition, Netflix also weighed in on HBO’s announcement on Wednesday that the premium programmer will launch a standalone OTT service in 2015 that will look to attract from a group of 10 million broadband-only customers in the U.S.
“Starting back in 2011 we started saying that HBO would be our primary long-term competitor, particularly for content,” Netflix noted. “The competition will drive us both to be better. It was inevitable and sensible that they would eventually offer their service as a standalone application. 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.”
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