Netflix denies increased competition behind slowing numbers

James McGrath
By James McGrath | 16 October 2014
Kevin Spacey in Netflix's original series House of Cards.

Shares in streaming giant Netflix took a dive last night on news that it had delievered fewer subscribers than expected, raising fears that competition could be starting to bite.

In after-market trading its shares took a 26% dive to $US330 ($A374) per share, following the announcement it added three million subscribers for the quarter, while the company previously projected some 700,000 more. 

It said, while it was not completely sure of the reason for the lower subscriber number, it speculated a higher subscription cost could be to blame for the slower uptake, but denied it had anything to do with increased competition.

The latest results came on the same day HBO parent Time Warner announced it would stream HBO content online, which won't require a TV subscription.

Knowing the decreased subscription rate would lead to speculation about increased competition, CEO Reed Hastings told shareholders that Netflix did not see increased competition as a threat.

"Since our per-member viewing and retention in the US are as strong as ever, we don't think increased competition from piracy, TV Everywhere, Amazon Prime Instant Video, Hulu, etc, is a major factor," Hastings stressed.

Adressing the HBO move specifically, he said that it was "inevitable and sensible" that HBO would launch online streaming as a standalone application, but said people would end up subscribing to both Netflix and HBO as the two broadcast different shows.

Despite fewer subscribers in the latest quarter, its revenue still managed to grow to more than $1.2 billion, broadly in line with analysts' expectations.

It has now projected revenue to increase to $1.3 billion over the next quarter. Despite this, it also forecast operating income to fall to $57 million from its current base of $110 million as new market expenses weighed on contributions from international markets.

For more on TV streaming in Australia see below


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