Netflix subs beginning to slow

Netflix shares dropped -15% in the after-hours trading on Monday after reporting that subscriber growth for the second quarter of 2016 had been lower than expected.

US subs came in at a five-year low with 0.16 million against a forecast of 0.5 million, while global growth was 1.7 million against a forecast of 2.5 million. Similarly, international net additions in Q2 fell short at 1.5 million compared to a 2 million forecast.

“We are growing, but not as fast as we would like or have been,” Netflix said in a statement.

“Disrupting a big market can be bumpy, but the opportunity ahead is as big as ever and we continue to improve every aspect of our business.”

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The subscription video on-demand service – once thought to be TV’s biggest threat – blamed the results on ‘un-grandfathering’ members from their old plans, which will see price hikes across the board (a £1.50 increase for UK members) complete this year.

However, Netflix said that churn of members who were un-grandfathered was “modest and conforms to expectations”.

“While un­grandfathering and associated media coverage may moderate near­term membership growth, we believe that un­grandfathering will provide us with more revenue to invest in our content to satisfy members, thus driving long­term growth.”

Netflix revenue also came in short at $1.96 billion against a $2.1 billion forecast.