Netflix Starts To Lose Subscribers

Subscription video-on-demand service Netflix Inc. (NASDAQ: NFLX) released figures this week that show its first quarterly drop in U.S. subscribers since 2011. The company reported that it lost 126,000 U.S. subscribers in the second quarter. It had previously forecast a gain of 300,000.

Netflix also missed its target for international subscribers. While predicting that it would add 4.7 million international subscribers in the second quarter, the company only managed to sign up 2.83 million new subscribers. In total, Netflix added 2.7 million new subscribers worldwide, a little more than half of its predicted 5 million.

Netflix blamed the subscriber miss on customer cancellations related to price increases. In the U.S., the price of its most popular plan rose $11 to $13 a month. The company also raised prices in Britain, Switzerland, Greece and Western Europe in the quarter.

A lighter content release slate was seen as another factor affecting subscriber numbers. Its outlook for the second half of 2019 is brighter because of the return of several hit shows, including “Stranger Things,” “The Crown” and “Orange Is the New Black.” Netflix expects to sign up 7 million new subscribers in the current quarter, compared with 6.1 million in the third quarter of last year.

Netflix earned 60 cents a share on sales of $4.92 billion in the second quarter. Earnings fell 29 percent while sales rose 26 percent on a year-over-year basis. Analysts had predicted earnings of 56 cents a share on sales of $4.93 billion for the quarter. Netflix ended the quarter with nearly 151.6 million subscribers worldwide, dwarfing its nearest rivals Amazon Prime and HBO.

The second quarter tends to be a weak period for Netflix in the United States. The nice weather and long days have many people enjoying outdoor activities instead of being indoors watching videos. Netflix has missed second-quarter subscriber expectations three times in the last four years. Investors still punished the company, with shares falling about 11 percent after the release of its earnings report.