San Francisco, UNITED STATES Jul 18- Netflix shares plunged in after-hours trade Wednesday after its quarterly update showed weaker-than-expected subscriber growth for the streaming television sector leader.
Netflix said it added 2.7 million new subscribers worldwide in the April-June period, well below expectations, as the sector prepared for offerings from rival groups including Walt Disney, Apple, and others.
Shares in Netflix skidded 11.97 percent to $319.07 in after-market trade following the results, which showed revenues and profits largely in line with analyst forecasts.
Netflix said that it still sees long-term growth on target, dismissing concerns that consumers were gravitating to rivals.
“I think our position is excellent,” Netflix chief executive Reed Hastings said in an earnings presentation.
“If investors believe in internet television, then our position in that market is very strong.”
Hastings maintained that while there may be a streaming television war going on, the market is so vast that rival services can thrive. He quipped that many Netflix employees are fans of HBO shows.
Netflix, known for its original shows such as “The Crown” and “Orange Is the New Black,” said the latest shows did not attract as many subscribers.
That, along with hikes in the price of subscriptions in some regions, appeared to dampen growth, Hastings and other top executives said.
Subscriber growth reignited in the opening weeks of the current quarter, with the release of the latest season of blockbuster original series “Stranger Things,” according to executives.
“Netflix has a difficult road ahead with looming competition and the removal of popular content, but a strong content schedule in Q3 should draw many former subscribers back in,” said eMarketer forecasting analyst Eric Haggstrom.
Netflix said revenue for the recently ended quarter grew 26 percent from a year ago to $4.9 billion and profit fell 29 percent to $271 million.
Netflix will be losing some of its hit shows such as “Friends” to rival platforms being launched in the coming months but argued that it will make up for that with original content.
“Much of our domestic, and eventually global, Disney catalog, as well as ‘Friends,’ ‘The Office,’ and some other licensed content will wind down over the coming years, freeing up budget for more original content,” the company said.
“From what we’ve seen in the past when we drop strong catalog content… our members shift over to enjoying our other great content.”
WarnerMedia will launch its new Netflix rival “HBO Max” in early 2020 after reclaiming the rights to stream its popular television comedy “Friends,” the company said Tuesday.
The new service will enter an increasingly crowded TV streaming marketplace, vying for customers with Netflix, Hulu, and Amazon as well as the soon-to-be-launched Disney+, and Apple’s upcoming product.