Netflix sees $18bn wiped off stock market value as US subscriber numbers fall

Streaming service loses members in its biggest market for first time in eight years, prompting fears that competition from rivals Disney, Apple and Amazon is beginning to bite

In the US, Netflix’s biggest market, it had 60.1 million paid-up members at the end of the quarter, down from 60.2 million (Reuters)

More than $18bn (£14.5m) was wiped off the stock market value of Netflix overnight on Wednesday after subscriber numbers fell in the US for the first time in eight years.

Worldwide, Netflix added 2.7 million subscribers between April and June, little more than half of the 5 million it had forecast, sending shares plunging 12 per cent in after-hours trading.

In the US, Netflix’s biggest market, subscriber numbers slipped to 60.1 million at the end of the quarter from 60.2 million in the previous period.

Netflix is still the dominant video-on-demand service with 151.6 million subscribers worldwide at the end of June, but rivals such as Amazon and Hulu have been investing heavily to compete.

Disney, which has an unrivalled back catalogue of films and television shows, is also ramping up its push into the streaming market and Apple launched its own service in March.

Netflix blamed the drop-off in growth on price rises in the US where consumers had to stomach price hikes of between 13 per cent and 18 per cent, depending on which package they have, with the most popular plan now $13 per month.

Disney plans to offer its new service, Disney Plus, for just $7 and has deep pockets to fund its expansion.

Netflix is banking on a number of hit shows to be released in the second half of 2019 – most notably series three of the immensely popular Stranger Things – to lure more customers.

Chief executive Reed Hastings was sanguine about the results. “Sometimes we forecast low, sometimes we forecast high—this is one where we forecasted high,” he said in the company’s video earnings interview. He said it was “easy to over-interpret” the significance of quarterly membership numbers.

By traditional measures of company performance Netflix is still growing fast. Price rises helped boost revenue by 26 per cent compared to the same quarter last year while profits exceeded expectations at £709m.

Mihir Haria-Shah, head of broadcast at media planning agency Total Media said: “Netflix’s head start means it remains in reasonable health whilst the new services such as Disney Plus get over any early teething issues.

“The bigger concern for Netflix is what happens further down the line once these new entrants have established themselves. It has essentially built its business on the back of leasing content from other companies and has had great success doing so.

“Now its content providers are becoming competitors it will have to invest even more into original content as existing deals expire and content is taken off the platform.”