SAN FRANCISCO -- Netflix's video streaming service experienced a significant slowdown in growth during its traditionally sluggish spring season, a drop-off that comes as the company girds for stiffer competition.
The service picked up 2.7 million worldwide subscribers for the April-June period. That's far below Netflix's forecast of 5 million subscribers. The second-quarter letdown, announced Wednesday, comes after Netflix attracted nearly 10 million subscribers during the first three months of the year, more than any other quarter since the debut of its video streaming service 12 years ago.
Netflix ended June with 151.6 million worldwide subscribers, far more than a current crop of video streaming rivals that includes Amazon and Hulu.
Signaling it expects to regain some momentum this summer, the company projected it will add 7 million subscribers from July through September. The optimism stems in part from the popularity of Stranger Things, whose third season attracted record viewership after its July 4 release.
But the battle for viewers' attention and dollars will get tougher this fall, when Walt Disney Co. and Apple plan to launch their own streaming services.
AT&T will join the fray next year with HBO Max, and NBC is expanding into video streaming, too.
But Netflix traced the second quarter's slow subscriber growth primarily to a recent round of price increases, including jumps of 13% to 18% in the U.S., its biggest market. That pushed the price of its most popular U.S. plan to $13 per month, testing the bounds of how much some consumers are willing to pay for a service that started out at $8 per month for the same level of service.
Some U.S. households decided Netflix is no longer worth it at the higher price, causing the company to end June with 120,000 fewer subscribers in the country than it had at the end of March. Netflix offset the U.S. setback with gains in some of the nearly 200 other countries where it sells its streaming service.
The increasingly crowded field vying for viewers' attention and money has led to questions about whether Netflix will be able to maintain the rapid rate of subscriber growth that has made its stock one of Wall Street's premier performers during the past decade.
In a sign of how quickly some of those gains can evaporate if Netflix starts to struggle for subscribers, the company's stock plunged by more than 12% in Wednesday's extended trading, to $317.
Netflix also needs more customers to help cover the costs of all the exclusive TV series and movies it keeps adding to its lineup to stand out for the rest of the crowd. The Los Gatos, Calif.-based company so far has been borrowing heavily to finance a highly acclaimed slate of programming that garnered 117 Emmy nominations, second only to HBO's 137 nominations among all networks.
Business on 07/18/2019