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Netflix growth misses mark despite strong earnings
[SAN FRANCISCO] Netflix subscriber growth missed its mark in the first quarter of this year, but the on-demand television star expects to hit the 100-million milestone this weekend.
Along with posting strong earnings on Monday, US-based Netflix reported a net increase of 4.95 million subscribers, most of those overseas where it has been investing in becoming a global entertainment network.
In comparison, Netflix gained 7.05 million subscribers in the prior quarter, raising expectations in the market.
"We have come to see these quarterly variances as mostly noise in the long-term growth trend and adoption of internet TV," Netflix said in a letter released along with the earnings figures.
Netflix finished the first quarter of this year with 98.75 million subscribers and predicted that its ranks would crest 100 million this weekend.
"That is a bit accomplishment," Netflix chief executive Reed Hastings said during a video briefing with analysts.
"We are super excited." The company expected it would add about 8.15 million subscribers overall during the first half of this year as compared with 8.42 million in the same period in 2016.
Netflix shares dipped and then rose in after-market trades that followed release of the quarterly earnings figures, eventually gaining more than a percent to reach US$149.25.
Executives declined to reveal details about viewing trends at Netflix, but Mr Hastings disclosed that people watch more than a billion hours worth of shows weekly at the service while Google-owned YouTube boasts that much viewership daily.
"We definitely have YouTube envy," Mr Hastings said.
"We are a little over a billion viewing hours a week, and YouTube has a billion a day so we have a ways to go to catch up." 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.
Netflix has no interest in getting into the live television streaming game, so is not facing off with services such as PlayStation Vue, DirecTV and YouTube TV, according to executives.
Mr Hastings saw Netflix and rival Amazon Prime Video as competing more with people's limited viewing time than they are with one another.
Both Amazon and Netflix have been investing heavily in original programming to win subscribers to their on-demand video services.
Netflix reported profit of US$178 million on revenue of US$2.64 billion in the first three months of this year as compared with net income of US$28 million on revenue of US$1.96 billion in the same period a year earlier.
The company described the opportunity for its service as "gigantic" and said it planned to continue investing in films and shows tailored to win fans in countries around the world.
"With a growing member base spread across the world, we seek to please diverse tastes with a wide breadth of content," Netflix said.
Netflix planned to spend a billion dollars this year on marketing aimed at attracting members.
"A bet on Netflix continues to be a bet on continued high growth, something which certainly isn't guaranteed," Jackdaw Research analyst Jan Dawson said in an online note.