Netflix Loses U.S. Subscribers as Price Hikes Impact Quarterly Growth
Netflix experiences its first U.S. net subscriber loss since 2011 after raising its standard plan price, causing the company to miss its global growth targets. The streaming giant blames the shortfall on recent price increases and a weaker content slate rather than upcoming market competition.
Netflix reports a net loss of 130,000 paid subscribers in the U.S. for its fiscal second quarter of 2019, marking its first domestic decline since a controversial corporate restructuring in 2011. The company attributes this drop primarily to a recent price increase that raises its standard monthly plan from $10.99 to $12.99. Overall global growth reaches just 2.7 million, which falls significantly short of the 5.0 million new subscribers the company originally anticipates.
Despite boasting massive viewing numbers for hit releases like "Murder Mystery" and "When They See Us," Netflix admits its Q2 content slate fails to drive the expected sign-ups. The company dismisses the threat of upcoming streaming competitors as a major factor in the slowdown, pointing out that rival services are not yet available in the market. Instead, executives highlight the immediate negative reaction to pricing changes in affected regions as the primary culprit for the missed targets.
Looking ahead to the third quarter, Netflix projects a strong recovery with an expected 7 million new paid members worldwide. This optimistic forecast relies heavily on the launch of a new, more affordable mobile-only subscription tier in India. Meanwhile, the disappointing second-quarter report causes Netflix stock to drop by more than 10 percent in after-hours trading.