Netflix Q3 2015 Earnings Report Falls Short Of Subscriber Targets

By 10/14/2015
Netflix Q3 2015 Earnings Report Falls Short Of Subscriber Targets

When Netflix reports on its quarterly earnings, it can usually brag that it has hit the growth benchmarks previously set as its three-month goals. In Q3 2015, however, the streaming video on-demand platforms numbers ended up lower than it expected. Despite the fact that Netflix brought in 3.6 million new subscribers between July 1st and September 30th, it fell short of its US subscriber acquisition target by 270,000 people.

Netflix said it would add 1.15 million new US subscribers in Q3, but its actual total was 880,000. In their latest earnings letter, Netflix CEO Reed Hastings and CFO David Wells attributed the lower-than-expected subscriber totals toslightly higher-than-expected involuntary churn (inability to collect), which we believe was driven in part by the ongoing transition to chip-based credit and debit cards.” That reasoning didn’t seem to satisfy all of the company’s investors, as Netflix stock fell 14% during after-hours trading on October 14th.

Another possible explanation for the dip is the lack of big-name original series releases Netflix touted in Q3. The company had previously credited original programming as a significant part of its growth, but the two most prominent Netflix originals–House of Cards and Orange is the New Black–were both dormant during the most recent quarter.


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While Netflix believes it will finish 2015 “at about 2014 levels,” there are a few upcoming changes that could hinder the company’s growth during Q4. The loss of movies from Epix, which has moved its catalog to Hulu instead, could drive away some subscribers, though Hastings and Wells wrote that they’ve “seen no material reduction in U.S. feature film viewing as we have so many other films for members to enjoy.” Recent price hikes could also scare off new customers; the standard Netflix service now costs $9.99, up from $8.99.

No matter what’s on the horizon for Netflix, the company’s execs seem confident about its future. Clearly, Bill Murray will make sure all their problems go away.

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