Netflix’s continued subscription price hikes might finally have reached the end of some customers’ patience in the U.S., judging from an overall paid subscriber decline the company reported in its quarterly earnings for its fiscal second quarter 2019 results. The company’s overall growth for paid subscribers climbed by 2.7 million worldwide, but it actually added 2.83 million new subscribers around the world — while losing around 130,000 net in the U.S. to account for the difference.
Netflix’s price for consumers went up from $10.99 to $12.99 during its fiscal Q2 reporting period, which definitely could account for some of the fall-off. The company doesn’t seem to have anticipated such a strong reaction, however, as it had anticipated a net 5.0 million subscriber growth number as of last quarter, based at least in part on the 5.5 million it added in paying customers during Q2 2018.
The company specifically says that it missed its subscriber growth adds more significantly in regions where it introduced a price hike, versus those where it did not — though its growth was lower than expected in all regions where it operates. You might think that some of its shedding of users in the U.S. has to do with competition, but the company points out that most of its material competitors are actually just announced, not available in market, so it thinks this isn’t really a significant cause.
Instead, Netflix points at its content library, as well as those pricing changes in markets where they do apply. The Q2 content slate caused fewer new sign-ups than the company expected, it said in its earnings release. That’s despite strong four-week performance numbers from “When They See Us” (25 million households), “Our Planet” (33 million), “Murder Mystery” (73 million), “The Perfect Date” (48 million) and “Always Be My Maybe” (32 million).
Still, the company thinks it will add a whole heap of new subscribers in Q3 this year, with an expectation of 7 million paid membership adds, which is significantly up from the 6.1 million it added last year. One big reason for this optimism might be that it’s going to launch a new, mobile-only and more affordable tier for India, which will launch during the quarter.
Netflix’s stock price is down more than 10% after hours as of this writing based on these results. The full Q2 Netflix earnings are available here.