Amid a weaker demand in the U.S., Netflix’s Q3 profit tumbled 50 percent as compared with last year. The company also announced that it added 3.62 million new subscribers, but only 880,000 new users in the U.S.
That’s 100,000 fewer subscribers from last year’s third-quarter and below expectations of 1.15 million new users in the U.S. And this may make it harder for the company to stick with its plan to grab 60 million to 90 million subscribers in North America.
So far, Netflix has 66.02 million subscribers. Last year, it had 6.63 million fewer members. In the U.S., there are 42.07 million paying Netflix subscribers.
When reached for comment the company blamed the new chip cards that caused delays in paying bills as many customers forgot to update their card numbers. Plus, account numbers also changed when the new credit cards arrived so many subscribers couldn’t pay for the service.
Netflix also has to deal with aggressive rivals including HBO, Hulu, and Amazon. Those companies announced that they were committed to deliver high quality programming and streaming services. For instance, Amazon now allows users of its video streaming service to download content, while Hulu rolled out an ad-free version of its site.
Netflix, however, said that despite weak earnings and missed goals the company is still on track towards the 90 million U.S. subscribers goal since online streaming videos is an ever expanding market.
“Sure there are a lot of competitors, but there always have been,”
Reed Hastings, Netflix’s CEO, told investors after the company released the Q3 financial results report.
Hastings reminded investors that the company had other types of competitors to face in the past. It competed against YouTube, cable and satellite. It has competed against rented DVDs and various pay-per-view services. And the business thrived because the company never ceased to reinvent itself.
Internationally, Netflix fared better and added 2.74 million new subscribers, which is above estimates. Worldwide, there are 23.95 million subscribers, the company reported. This summer Netflix became available in Japan. For the next quarter the company hopes to bring the service in Europe. Spain, Portugal and Italy would see it happen as early as next week.
Profit for the third-quarter was $29.4 million, which is a nearly 50 percent slump as compared with last year’s $59.3 million. Netflix hoped for at least $31 million in net income for Q3, but it told investors that the situation would get back to normal by the end of 2016 when the service should go global.
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