Netflix lowers subscriber forecasts as international growth disappoints

Netflix lowers subscriber forecasts as international growth disappoints

   Michelle Clancy
   | 19 April 2016

Netflix is projecting lower subscriber additions going forward for its international markets.


netflix comparisonFor the upcoming second quarter, the company said that it will add just two million international subscribers, compared with 2.37 million in the year-ago period — before it “went global” with its footprint. Its content costs continue to escalate as well, eating into margins — the global markets are where its profit is expected to come from, but with slowing growth the Netflix business model seems shakier than it did a quarter ago.

The streaming giant did beat its projection for subscriber growth in the first quarter. It added 6.74 million subscribers in the first quarter, ahead of its estimate of 6.10 million. That was due, ironically, to a surge in overseas growth as the company launched in 130 new markets.

In the US market, even though subscriber growth beat Netflix’s estimate, it fell slightly from the prior year, continuing a trend from the previous two quarters. Netflix expects to increase its US base by just 500,000 customers in the second quarter, compared with 900,000 last year.

The international forecast is “below street estimates and reflects an unexpected slowdown despite the fact they just went global,” said Drexel Hamilton analyst Tony Wible, speaking to the Wall Street Journal. “Investors will want to dig into that more.”