Netflix is now available in most countries around the world, putting more pressure on the company to continue its fast-paced growth abroad as well as at home.þþOn Monday, Netflix announced that it expected to add just two million members outside the United States in the second quarter this year — less than the 3.5 million analysts had expected. The figure also represents a decrease from the 2.4 million members the streaming service added internationally in the same period the previous year.þþThat cloudy forecast sent shares down more than 10 percent in after-hours trading, as Netflix has tied its future to its bold global push. The company has been pouring resources into its expanding international footprint, telling investors that it would run at break-even profitability until the end of 2016 as it continued to roll out the service abroad and increased its investment in content.þþIn January, Netflix announced that it had added 130 countries to its service map, bringing the total number of countries where Netflix is available to 190.þþAs the company experienced slowing growth in the United States over the past year, executives pointed to the rest of the world as the next frontier for streaming television to hundreds of millions more potential customers. While the United States counts about 100 million broadband households, for instance, there are about 730 million broadband households worldwide, according to analyst estimates.þþOn Monday, Netflix executives said that they had just skimmed the surface of that growth potential and that there was still a big opportunity ahead. The executives attributed the soft international forecast for the second quarter this year to a tough comparison from the previous year, when Netflix started the service in Australia and New Zealand.þþReed Hastings, chief executive of Netflix, said the company had yet to reach its full potential in many countries because the service in most regions is only in English and available only via international credit cards.þþ“We cannot wait to break through 100 million subscribers sometime next year,” Mr. Hastings said during an earnings call.þþAt the same time, Netflix said that it expected to add just 500,000 members in the United States in the second quarter because of what it described as a “modest impact” from price increases. The company characterized the forecast as “in line” with previous years; it added 900,000 members in the United States during the same period in 2015.þþThe development came in what was already a rough start to the week for the streaming service. On Sunday, Amazon created a more direct competitor to Netflix with the introduction of a new $9 monthly subscription for its Prime movie and television streaming service.þþOn the fast-changing competitive landscape, Mr. Hastings said in a letter to investors that the “market for relaxation time and disposable income is huge, and we are but a little boat in a vast sea.”þþHe added, “We earn a tiny fraction of consumers’ time and money, and have lots of opportunity ahead to win more of your evenings away from all those other activities if we can keep improving.”þþThat uncertainty over the competitive landscape, as well as fears about growth prospects both inside and outside the United States, overshadowed the generally positive first-quarter financial results that Netflix announced on Monday.þþThe company beat expectations for profit and revenue growth during the first quarter. Profits totaled $28 million, up 16 percent from the same period last year, and total revenues increased 24 percent to nearly $2 billion.þþNetflix added a record 6.7 million total streaming members during the first quarter, bringing its total to 81.5 million, with about 42 percent outside the United States. Netflix had forecast that it would reach nearly 80.9 million total paid members in the quarter.þþIn the United States, Netflix surpassed its forecasts for subscriber growth during a period in which price increases went into effect for some customers. The company added 2.23 million subscribers in America during the quarter, bringing its paid membership in the country to 45.7 million.þþOutside the United States, Netflix also beat its expectations for growth, adding 4.5 million international streaming subscribers.þþThe company said it was planning to spend more than $6 billion on programming in 2017, up from $5 billion this year.
Source: NY Times
