Shares of Netflix fell nearly 12% in after-hours Nasdaq trading after the SVOD giant missed guidance on both domestic and global subscriber growth in the second quarter.
The Los Gatos, Calif. technology company reported a loss of 100,000 subscribers, well off forecasted growth of 300,000 users. This came after Netflix raised the price of its most popular tier, the one that supports two simultaneous HD streams, from $10.99 a month to $12.99 a month. The low-end, single-stream SD plan went up one dollar to $8.99 a month. And the premium 4K/HDR-enabled, four-stream plan increased by two dollars to $15.99 a month.
The company also undershot on international paid subscriber adds, bringing in 2.83 million new customers vs. forecasts of 4.81 million.
Revenue rose 26% during Q2 to $4.92 billion. But again, it was off forecasts of $4.93 billion.
“Our missed forecast was across all regions, but slightly more so in regions with price increases,” the company said in its letter to shareholders.
Netflix expects better results in the third quarter, which it says will factor in exceptional viewership of recently refreshed original series Orange Is the New Black and Stranger Things. The company told investors to expect global subscriber growth of around 7 million.
Oh, and despite speculation that Netflix might turn to advertising to improve its revenue profile, the company said not to expect such a move anytime soon.
“We, like HBO, are advertising free,” the company said in its shareholder note. “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. We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction.”
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Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!
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