Netflix's first-quarter subscriber additions misses estimates

Netflix Subscriber Growth

BI Intelligence

NFLX's share price soared more than 4.33% in the latest session, as investors turned their concentration on an expected growth in its net subscribers in the following quarters. In response, Hastings said that sleep was actually the company's biggest competitor, Recode reports.

Netflix's first quarter in 2017 wasn't particularly great.

The streaming giant had forecast an addition of 5.2 million new subscribers from January through March 2017, compared with 6.74 million added during those three months past year.

Original content has become the core of Netflix's service. Analysts and investors still consider subscriber additions to be the company's most important metric. There are now 44.5 million paid global subscribers, which represents 48% of total subscriber base. The streaming service gained just 5 million subscribers globally in the last quarter, it said yesterday, missing the 5.3 million additions FactSet analysts predicted and the 5.2 million Netflix itself forecasted last quarter.

We have come to see these quarterly variances as mostly noise in the long-term growth trend and adoption of internet TV. Shares fell about 1 percent to $145.80 in after-hour trading. For one, the company has been spending a lot of money over things like content and marketing and it is through these subscribers that it can hope to make some of the money back - preferably with interest. The company predicted it would add 5.2 million new subscribers (1.5 million in the USA and 3.7 million internationally). Other cable channels also are contributing internet-only benefits as more viewers, particularly younger people, avoid traditional TV bundles and subscribe to streaming services preferably.

However, Netflix attributes the subscriber shortcomings to the slew of new content it is working on, which has also delayed the release of productions that used to debut in Q1, most notably season 5 of House of Cards. The surge in subscribers of US-based Netflix comes after it invested heavily in overseas markets. Netflix's services extend from $8 to $12 a month, with the most economical option at $10. "But we are also open to supporting the large theater chains, such as AMC and Regal in the USA, if they want to offer our films, such as our upcoming Will Smith film Bright, in theaters simultaneous to Netflix", said Netflix, in a letter to its shareholders (pdf).

"We've definitely got YouTube Envy", Hastings said while pointing out that while YouTube streams more than 1 billion hours of video per day, Netflix's SVOD offering streams a little over 1 billion hours per week. "So we have a little ways to go".

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