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Netflix shares witness 15% dip post Q2'16 earnings report

21-July-2016
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Netflix shares witness 15% dip post Q2'16 earnings report

Netflix has forecasted slower-than-expected growth in the US and international markets in the current quarter. According to media reports the company’s second quarter has ended with 83 million subscribers, adding only 160,000 US subscribers from April through June, its lowest gain in the period since splitting up its video-streaming and DVD-by-mail services five years ago.

CEO Reed Hastings blamed the dull performance on cancellations by subscribers facing price increases of as much as $2 per month, following the expiration of a two-year rate freeze. After the quarterly report its shares plummeted 15 per cent in after-hours trade.

In addition to the US slowdown, Netflix is facing steeper competition (from rivals like Google, Amazon, Apple, and HBO) in addition to an uncertain future in international markets. Reports also mentioned that net profit for the quarter was USD 41 million, up from USD 26 million a year earlier. Revenue rose to USD 2.1 billion from USD 1.6 billion.

 According to reports despite the poor performance, Netflix has said that with the increased revenue Netflix plans to invest in better content. Earlier this year, the company expanded to 130 new countries except China.

Whereas in India Netflix has completed six months and so far the only big announcement it has made was of its first original series on novelist Vikram Chandra’s ‘Sacred Games’, which will be produced in collaboration with Phantom Films. With its subscription rate on the higher side and rising competition from plethora of new players in OTT segment, the company still has a long way to go on content, technology and payment channels. 

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