Netflix guided to Q2 USA and worldwide net additions of 600,000 and 2.6 million, respectively, both above previous expectations, driven in part by an anticipated stronger content line-up, including new seasons of House of Cards, Orange Is the New Black, and the just launched 13 Reasons Why. Consolidated revenues rose to $2.6 billion, delivering a net profit of $178 million. However, the number of subscribers was down slightly on projections.
Netflix issued its first quarter user gains report to investors today, and the fact that it fell short of user growth estimates caused a brief drop in the streaming giant's stock price. However, Netflix was focused more on films and original content as it lost out on deals with the major studios.
In addition, the company reported it had added 4.95 million new subscribers, lower than its own expectations for 5.2 million subscriber additions and consensus expectations of 5.3 million net added subscribers. Netflix is still the industry leader when it comes to quality and quantity of original programming, Amazon is doing its best to carve into their lead. "When you look at the last five years, everyone is anxious every quarter about saturation in the USA, and we've just continued to grow", he said. Netflix made the prediction Monday with the release of its first-quarter earnings.
Netflix said it plans to spend more than $1 billion to market its original content in 2017 through so-called "programmatic advertising".
"The company needs to plan for a future in which its USA business is virtually saturated, and overseas growth starts slowing", said Paul Verna, eMarketer principal analyst focused on digital video.More news: Closing arguments scheduled in trooper ambush trial
For the earnings quarter that ended March 31, Netflix added just 5 million members in total: 1.42 million subscribers in the U.S. and 3.53 million subscribers internationally, both of which missed analysts' estimates.
"You know, think about it, when you watch a show from Netflix and you get addicted to it, you stay up late at night", Hastings said. He noted that the company was up against a hard sequential comparison because the fourth quarter was particularly strong as some subscribers whose prices were raised as a result of the un-grandfathering of their plans signed back up.
Instead, the subscription video-on-demand service signaled a broadening interest in comedic material, pointing to a milestone set by its just-released "Dave Chappelle: Collection 1" special, which the company said is already its most-viewed comedy special ever.
Netflix forecasted on Monday that its service added almost 5 million subscribers during the first quarter of the year and will reach up to 98.7 million customers until March in around 190 countries.
This means the streaming company is paying virtually no tax outside of the United States, where it made a taxable profit of $606 million from revenues of $1.47 billion.