QFX 0.00% 0.1¢ quickflix limited

Netflix investors get dose of ’Groundhog Day’

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    SAN FRANCISCO (MarketWatch) — It may seem a bit like a movie, but not one that Netflix Inc. investors wanted to star in.
    Netflix NFLX, -25.45%   said in its investor letter that during the third quarter, it added one million new subscribers in the U.S., to end the quarter with 37.22 million members, lower than its forecast and below the previous year.
    “Year on year net additions in the US were down,” said Netflix Chief Executive Reed Hastings, in his quarterly letter to shareholders. “As best we can tell, the primary cause is the slightly higher prices we now have compared to a year ago.” Last quarter, its price hike to $8.99 did not affect subscriber growth
    Even though Netflix carefully managed its latest price hike to avoid alienating its customers, the news on Wednesday recalled the summer of 2011 when it lost about 1 million subscribers in the wake of a far bigger price hike.
    As with 2011, the sky-high shares of the streaming video company were tumbling on news of lower-than-expected subscribers. The repeat scenario is reminiscent of the 1993 Bill Murray movie “Groundhog Day,” in which the hapless TV weatherman is condemned to repeat the same day over and over again.
    In addition, the company will soon be facing a new rival, this time in the form of Time-Warner’s TWX, +2.22%  HBO, which announced that it will launch a new streaming video service, one that does not require a subscription to the premium cable service.
    Shares of Netflix tumbled nearly 26% in after-hours trading and investors were waiting for more information to come in the company’s interview with investors at 3 pm Pacific Time. Even with the popularity of its award-winning new shows, whether or not Netflix has hit a major saturation point in the U.S. with its streaming service is a question that will likely be pondered.
 
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