Netflix shares drop Wednesday after the chief of executive announced that they brought in fewer subscribers than anticipated.
Due to the price increase implemented during the second quarter, there's a rise in domestic revenue of $877 million, which is in-line with the company's forecast. But in a statement released by the company, they said that they under-forecasted the membership growth for the past three quarters, but didn't meet the expectation for the recently closed quarter.
CEO Reed Hastings said that they under-forecasted the membership growth of the online streaming website. There are less than a million new U.S. subscribers and only 2 million subscribers from other countries. The figures are below the company's projected growth.
The company underestimated the impact of the price increase since the new season of Orange is the New Black pulled strong sales in the previous quarter.
"This quarter we over-forecasted membership growth. We'll continue to give you our internal forecast for the current quarter, and it will be high some of the time and low other times," said Hastings.
Still, Netflix said that they're happy with the increase in revenue and plans to continue improving their service "with better content, better streaming and better choosing." For the fourth quarter, they already factored in the possible effects of increased membership fee.
Netflix also dismissed their competitors and piracy as factors in the decreased growth in membership. They believe that they still have a stronghold in the American market despite competing with other big streaming companies "TV Everywhere, Amazon Prime Instant Video, and Hulu."
Netflix's global members now total 53.1 in numbers, with a revenue of $1.22 billion. In September, they launched the service in the European countries France, Germany, Austria, Switzerland, Belgium and Luxembourg, adding 66 million households to their potential market.
This week, HBO announced that they start offering a stand-alone streaming service to compete with the likes of Netflix and Hulu.
