Netflix experienced a global slowdown in growth in the second quarter, securing only two-thirds of the new streaming subscribers it had previously forecast.
Results published by the company show that in the US it gained only 160,000, compared to 2.23 million in the previous quarter and 880,000 in Q2 2015.
Internationally, following on from the major expansion at the start of the year, it gained 4.51 million new streaming customers in Q1, only to see that figure fall to 1.52 million in the second quarter. Globally, its additions in Q2 totaled 1.7 million, compared to the 2.5 million it had forecast.
In its statement to shareholders, Netflix says that although gross additions were on target, churn increased slightly and unexpectedly. This, it adds, was due to press coverage that led some customers to believe that price rises were impending rather than the completion of two years of “grandfathering”.
Netflix believes the latter, due to be completed in the second half of this year, will allow it to invest more in content and thereby drive long-term growth.
The company’s international net additions of 1.52 million in Q2 were short of the 2 million forecast and were impacted by un-grandfathering in Canada, UK/Ireland, Latin America and the Nordics.
Netflix is now forecasting 2 million net additions in Q3. Furthermore, it will localise in Poland and Turkey, with the addition of local language in the user interface, subtitles and dubbing. Localisation will follow in other markets “over time as economically prudent”.
It also describes the regulatory climate in China, where it has yet to launch, as becoming more challenging.
Significantly, Netflix also says that it does not believe market saturation is a key factor in the US given that we experienced similar performance over the same period in multiple countries with differing levels of Netflix market penetration.
Netflix’s streaming revenues in Q2 amounted to $1,966 million, with the US contributing $1,208 million and international $758 million. The latter are forecast to increase to $1,309 million and $846 million in Q3.