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Netflix Wobbles As Subscribers Dump Streaming Service

Netflix has only added 1.68 million subscribers in the second quarter of 2016, this is short of what the Company was forecasting, their stock fell fallen 17% overnight following the news.

In Australia Netflix subscribers are believed to have fallen back due in part to limited content.

Netflix said it experienced higher “churn,” with more viewers turning off the service.

The company’s outlook for the current period reflects increased competition from the likes of Stan and Presto.

What Australian subscribers will get is instant access to all episodes of the new “Star Trek” series produced by CES in the USA.

Each episode will be available to Netflix Australia subscribers within 24 hours of airing on CBS. In addition, all 727 existing episodes of the “Star Trek” library will be offered on Netflix around the world by the end of 2016, the companies said last night.

Bloomberg reports that in International markets, the company added only 1.52 million new customers compared with an April projection of 2 million, the company said Monday in a statement posted on its website.

Netflix also added 160,000 in the U.S., bringing the company total to 83.2 million. The company had predicted about 500,000 new domestic customers.

While Netflix saw gains in sales and profit, investors focus on user growth, especially from fast-growing international markets. Chief Executive Officer Reed Hastings has raised prices by $1 or $2 a month for new customers and slowly imposed those on existing customers to avoid upsetting too many at once.

This quarter, Netflix expects to add 2.3 million net new customers, including 300,000 in the U.S. and 2 million internationally. Gains in the just-ended period were the fewest since the second quarter of 2013. The company forecasts profit of 5 cents a share, a drop from 7 cents a year earlier.

The shares sank as much as 17 percent to $81.84 in late trading. They were quoted at $83.17 at 4:43 p.m. in extended trading after closing at $98.81 in New York.

This quarter, Netflix expects to add 2.3 million net new customers, including 300,000 in the U.S. and 2 million internationally. Gains in the just-ended period were the fewest since the second quarter of 2013. The company forecasts profit of 5 cents a share, a drop from 7 cents a year earlier.

With more than 47 million customers in the U.S., exceeding any domestic premium cable network, Netflix is relying on overseas markets to provide most of its new subscribers in the years ahead. Most analysts anticipate the company’s international customer base will surpass the domestic total in the next couple of years.

Sales reached $2.11 billion, up 28 percent more than a year ago.

Overseas markets now account for 43 percent of Netflix’s overall subscriber base.

Netflix introduced its TV service to 130 new markets in January, completing its international expansion save for one major market: China. The company has reiterated its interest in entering the world’s most populous country, but has provided few updates on its efforts to do so.

With no new market to enter anytime soon, Netflix has moderated forecasts for international growth, citing difficult comparisons with previous quarters when it was making splashy debuts in different countries. Netflix is also in the early days of learning the best ways to satisfy users in countries like India, Japan and Poland.

Ted Sarandos, the company’s chief content officer, has been acquiring movies and TV shows to satisfy the tastes of a global audience and commissioning local TV series for markets like Italy, Brazil and India but not Australia. Netflix has used the popularity of programs “House of Cards” and “Orange Is the New Black” to entice new customers in the U.S. and some international markets.

“Although the international opportunity is robust in the long term, we believe that nearer-term, it may be more challenging than expected,” John Janedis, an analyst with Jefferies & Co., said in a note issued before earnings. “In developed markets, we believe that there are regional players who have established compelling content offerings ahead of Netflix’s launch (some at lower price points than Netflix) with fewer language barriers and more localized content.”

Many investors have bought into the long-term vision, trusting Netflix’s ability to add new customers and extract more money from each one.

The company has been raising prices for millions of U.S. customers over the past few months, which will add $470 million in incremental annual revenue, according to estimates by Nomura Holdings. Meanwhile, Comcast Corp. agreed to offer Netflix on its X1 set-top boxes, which could help the company add new users at home.

Hastings has promised more material profits starting next year, when the company no longer has to pay the start-up costs of entering new markets.



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