Subscribers continue to stream into Netflix's online-video service, just not as many in the US.
Netflix is a hit with consumers around the world, thanks to its strategy of expanding to new countries with its growing menu of popular original content for a low monthly price. But new debit and credit cards with built-in chips made it difficult for Netflix to collect fees from US subscribers, causing what it called "involuntary churn."
The bright side came from Netflix's overseas subscribers, thanks to an aggressive agenda: To hit its goal of serving 200 countries before 2017, Netflix needs to enter about eight new countries every month. And Tony Wible, an analyst the Janney's investment firm, predicts Netflix's programming budget will grow to $5 billion next year, rivaling the spending at most traditional US networks.
That expanding budget will pinch customers' wallets. Netflix last week raised the price of its most popular plan by $1 for new members in the US, Canada and Latin America, a similar increase it implemented in Europe in the summer.
US subscribers rose by 880,000 thousand to 43.18 million. That's short of the 1.15 million the company predicted. Overseas subscribers increased by 2.74 million to 25.99 million, as Netflix focuses on rapid international expansion with the aim of launching worldwide by the end of next year. The total number of subscribers rose to more than 69 million in the three-month period ended September.
Shares fell as much as 12 percent to $96.90 in after-hours trading, it part because of lower US subscriber growth. It also missed Wall Street's profit and revenue estimates.
Netflix reported a profit of $29.4 million, or 7 cents a share, on $1.74 billion in revenue. Analysts on average expected per-share profit of 8 cents on $1.75 billion.