Netflix shares plunged in after-hours trade Wednesday after its quarterly update showed weaker-than-expected subscriber growth for the streaming television sector leader.
Netflix said it added 2.7 million new subscribers worldwide in the April-June period, well below expectations, as the sector prepared for offerings from rival groups including Walt Disney, Apple and others.
Shares in Netflix skidded 10.3 percent in after-market trade after the results, which showed revenues and profits largely in line with analyst forecasts.
Netflix said in its letter to investors that it still sees long-term growth on target, dismissing concerns that consumers were gravitating to rivals.
“We don’t believe competition was a factor since there wasn’t a material change in the competitive landscape during the second quarter, and competitive intensity and our penetration is varied across regions,” the letter said.
Netflix, known for its original shows such as “The Crown” and “Orange is the New Black,” said the latest shows did not attract as many new subscribers.
“We think the second quarter’s content slate drove less growth in paid net adds than we anticipated,” the company said.
“Additionally, the first quarter was so large for us (9.6m net adds), there may have been more pull-forward effect than we realized.”
Netflix said revenue for the quarter grew 26 percent from a year ago to $4.9 billion and profit was down 29 percent at $271 million.
Netflix will be losing some of its hit shows such as “Friends” to rival platforms being launched in the coming months, but argued that it will make up for that with original content.
“Much of our domestic, and eventually global, Disney catalog, as well as ‘Friends,’ ‘The Office,’ and some other licensed content will wind down over the coming years, freeing up budget for more original content,” the company said.
“From what we’ve seen in the past when we drop strong catalog content… our members shift over to enjoying our other great content.”
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