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Netflix fell well short of its projected 2.5 million new subscribers for the second quarter, instead attracting just 1.68 million newcomers which brings its total number of subscribers to 83.18 million globally. In the US, Netflix added just 160,000 subscribers.
In a letter to shareholders, Netflix said its churn ticked up slightly and unexpectedly (and remained that way through the quarter) which happened to coincide with press coverage in early April regarding plans to “un-grandfather” longer tenured members.
The “un-grandfathering” Netflix is referring to is a price hike it is implementing this year.
Unsurprisingly, share value is tanking in after-hours trading and is currently down 13.27 percent as of writing.
In October of last year, Netflix raised the price of its HD plan by a buck, from $8.99 to $9.99. The increase was effective immediately but only for new members. Existing members locked in their cheaper rate.
Netflix said today that un-grandfathering and associated media coverage may moderate near-term membership growth but over time, it’ll help drive long-term growth by allowing them to deliver more content to their subscribers.
Netflix reported revenues of $2.11 billion on the quarter with a profit of $40.8 million, or $0.09 per share.
Netflix is projecting to add 2.3 million subscribers this quarter.