Netflix lowers US target but hails international growth

Netflix has lowered its full year subscriber target for the US, but said it has witnessed stronger than forecast growth in each of the international markets in which it operates.

As expected, the company reduced its subscriber target in the US from seven million net additions to five million in the wake of reporting its third-quarter results.

CEO Reed Hastings admitted the company had made a mistake in forecasting the higher number of new customers.

Speaking to analysts after the results he said: “I think we’re feeling our way along as the streaming market grows, and we miss-predicted, but I would call that more of a forecasting error than anything else.” He added: “But in terms of actual performance of the business to grow five million net adds, domestic, is substantial, and we feel good about that and about the growth next year.”

Internationally, the company added just under 700,000 new customers, taking the total to 4.3 million although 620,000 of these are customers taking a free trial.

The loss from international operations increased year on year and was US$92 million for the quarter. Hastings said that, following the launch in the Scandinavia, the loss from its international operations will peak in the fourth quarter at US$113 million and decrease thereafter.

Numbers for Scandinavia will not be released until the year-end results, but management said take-up of the free trial offer was strong. In the UK and Ireland Hastings said that Netflix was beating Amazon’s Lovefilm. “We believe our viewing is higher. We think our content is better. We’re growing faster, but it’s a real head-to-head battle,” he said.

In terms of content trends, Hastings said that two-thirds of viewing was now TV series and that, globally, there were three billion hours were viewed in the third quarter.

Netflix reported 1.16 million new subscribers in the US, taking the total to 25.1 million, 23.8 million of which were paying customers.

Quarterly revenues were US$905 million compared with US$822 million a year ago. Profit was US$8 million compared with US$62 million.