Viewers are switching off Netflix for the first time in eight years
Company says its shows weren't as popular as hoped
Netflix shares fell more than 10 percent on Wednesday evening as the company announced it had lost 130,000 US customers. The viewers cancelled their subscriptions between April and June.
Growth was seen outside of the US, but the number of paying subscribers grew far more slowly than Netflix had predicted. Non-US paying customers increased by 2.83 million in the quarter, far below the 4.8 million the company had expected.
The 130,000 loss in the US went against what analysts were expecting, as they had hoped for a 352,000 gain in the same three-month period, reports Reuters.
Netflix blamed the losses on price increases, which it has experimented with across several countries in recent months. Asking for more money from customers comes at a difficult time, as Netflix is about to get some major competition from Disney and Apple, who are both set to launch their own rival streaming services later this year.
Prices for Netflix were raised in the UK, Switzerland, Greece and parts of Western Europe during the last three months.
Netflix said in a letter to investors: "Our missed forecast was across all regions, but slightly more so in regions with price increases. We think Q2's content slate drove less growth in paid adds than we anticipated."
That second sentence does not refer to advertisements, but instead is Netflix saying that perhaps the TV shows it offers over the last three months weren't as popular as expected. The company must also be concerns about losing some big shows to rivals streaming services, with The Office and Friends both leaving soon, for WarnerMedia and NBC Universal respectively.
Looking for the silver lining - and with 151.6 million global customers, there certainly is one - Netflix boss Reed Hastings said: "I think our position is excellent," adding: "It's never been a better time for talent. They get to bid themselves off between us, Disney, Amazon etc. But it's not a zero-sum competition. I think everybody gets that."
Addressing the looming competition from Apple and Disney, Hastings added: "People will subscribe to multiple shows. It's a great competition that helps build the industry, and the advantage of having something catchy like the 'streaming wars' is it draws more attention. And because of that, consumers shift more quickly from the linear TV to the streaming TV."
Hastings also has a threat in the form of YouTube, which is far larger and offers its content for free, supported by advertisements. This model, the Netflix boss said in a letter to shareholders, is not something his company will copy.
"We, like HBO, are advertising free. That remains a deep part of our brand proposition; when you read speculation that we are moving into selling advertising, be confident that this is false. We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction."