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Netflix customer growth slightly slower than expected in Q1

21 Avril 2017

The streaming video company pushed back the next season of its smash-hit "House of Cards", and other programing to the second quarter, meaning it lured in fewer new subscribers in the first quarter than expected, but will likely make it up from April through June.

With almost 100 million subscribers, Netflix assumes lead in the on-demand streaming space.

The Netflix website and logo are displayed on laptop computers.

Analysts were expecting slower growth this quarter, after Netflix expanded to more than 130 new countries in the year-earlier period.

In addition, the company said that in the second quarter, it would add 600,000 subscribers domestically, and add 2.6 million in the rest of the world.

According to Netflix chief executive Reed Hastings, the 100 million mile-stone is a bit of an accomplishment for them and they are all super excited. However, Netflix did provide upbeat guidance for second quarter subscriber additions at 3.2 million, well above the 2.54 million subscribers analysts were expecting.

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Netflix will spend more than $1 billion on marketing this year, including an increase in programmatic advertising activity to drive member acquisition. Netflix said in a letter to investors variance in subscriber numbers could be attributed to "noise" in the adoption of internet TV. "We definitely have YouTube envy".

He downplayed competition, saying "entertainment is not a zero-sum game" and it is more about winning fans with content in the on-demand viewing market.

And it may only get harder for the streaming company as more competitors like Amazon and Hulu, which also have a lot of critically acclaimed shows, begin to hit their stride. In the first quarter of 2017, it added $2.5bn of revenue, in addition to attracting 5 million new members, bringing the total to 98.75m. Starting this year, we can be primarily measured by revenue growth and (global) operating margins as our primary metrics.

"We're happy with the 41.3 percent lift in NFLX since last October, but continue to believe it's not too late for large-cap growth PMs to take new positions in what remains one of the only true large-cap growth stories in Media", the firm said.

Netflix's marketing budget has almost doubled over the past few years from $607,186 in 2014 to a forecast of more than $1 billion this year.

For now, Netflix Inc. investors can have rapid subscriber growth or a big jump in profit - not both.

Netflix customer growth slightly slower than expected in Q1