Netflix US subscriber additions flag, mulls news content


Details

Michelle Clancy

| 15 October 2015





The wheels on the Netflix juggernaut seem to be slowing as the subscription video-on-demand (SVOD) leader added only 880,000 net subscribers in the US during the third quarter.


Meanwhile, in a video-conference session following its earnings call, CEO Reed Hastings and chief content officer Ted Sarandos discussed content, and talked about expanding into news and sports.

That misses the company's guidance significantly — it had been expecting 1.15 million adds. Execs said that a higher-than-unexpected involuntary churn impacted the subscriber tally.

International net subs surpassed expectations though: it added 2.74 million vs. the 2.40 million that it was expecting.

In all, total Netflix memberships are up to 69.17 million, and guidance for Q4 is for 1.65 million US adds and 3.50 million global subs to sign on. The company appears to remain bullish on its subscriber additions, announcing a pricing hike earlier in the week.

Meanwhile, the Q3 total revenue was $1.58 million. Of that, streaming contribution margin was 17.5% vs. 17.1% expected and 16.7% in Q2. The contribution margin rate in the US was 32.4% vs. a forecast for 32.6%. Netflix said that it will continue to target a 40% contribution rate in the US and sees mix and pricing added to profitability on the international side over the next few years.

On the video call, execs mulled new genres — which is what it might take to hit its subscriber guidance.

"What is the likelihood we compete directly with Vice in the next two years?" Hastings said to Sarandos.

"Probably high," Sarandos answered. "On the news side, we are definitely being more adventurous about the genres we are going into."

However, a company rep later said that there were no immediate plans nor overtures to media companies to enact such a plan.

As for sports, however, Sarandos said that Netflix has no interest in bidding for live sports rights. "Sports on demand is not as exciting as sports live," he said.