Netflix plan to conquer world stumbles, for now | The Daily Star
12:00 AM, July 21, 2016 / LAST MODIFIED: 12:00 AM, July 21, 2016

Netflix plan to conquer world stumbles, for now

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The plan by Netflix to conquer the world with its streaming video service is moving slower than expected.

Netflix shares skidded 13 percent to close at $85.84 Tuesday, a day after reporting weaker-than-expected growth in its subscriber base.

The company said it ended the second quarter with 83 million subscribers, adding 1.7 million. That was well below Netflix's own forecast of 2.5 million additions and lower than many analyst forecasts.

Netflix said growth was hurt, especially in the United States, when it raised rates on many long-time subscribers who had been "grandfathered" in when it hiked most prices. Netflix's market value has dropped by around one-third from its peak late last year to some $37 billion, sparking speculation by some analysts that it could become a takeover target.

Analysts said Netflix is still showing growth, but not at the breakneck pace expected when the company announced it had expanded its global footprint to 190 countries, making its streaming service available in 130 new markets.

The company effectively raised its price for many customers, which provided a boost to revenue but hurt new subscriptions and may have caused some customers to turn to rivals such as Hulu or Amazon.

"These price hikes now place Netflix into a similar price category as it competitors," said Jonathan Broughton at IHS Technology in a note to clients.

Broughton said growth in new markets was disappointing, adding that Netflix may need to do more to connect with viewers around the world.

"Netflix has been slow to invest in international content, even in larger countries, and this has stalled growth," he said.

"Local content has been cited as key to expansion in international markets and pulling back from this may be detrimental to the company outlook outside the US and UK." Daniel Salmon at BMO Capital Markets said Netflix faces "a period of challenging visibility" as it seeks to expand globally.

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