TECH
10/15/2014 05:29 pm ET Updated Oct 16, 2014

Netflix Shares Collapse Because Of Slowing Subscriber Growth

(Reuters) - Netflix Inc reported quarterly net subscriber additions below its forecast due to lower subscriber growth in the United States, sending the video-streaming company's shares down as much as 27 percent in extended trading.

Netflix added a net of about 3 million customers worldwide in the third quarter ended Sept. 30, below its forecast of 3.7 million.

The company attracted about 980,000 new customers in the United States, its largest market, down from 1.29 million in the same period a year earlier.

"Year-on-year net additions in the U.S. were down ... As best we can tell, the primary cause is the slightly higher prices we now have compared to a year ago," the company said in a statement.

"This quarter we over-forecasted membership growth," the company added.

Netflix said in April that it intended to raise its subscription price for new customers by $1 or $2 a month to help it buy more movies and TV shows and improve service for its subscribers.

The company has invested in original series such as "House of Cards" and "Orange is the New Black" to fend off competition from online video players such as Amazon.com Inc, Time Warner Inc's HBO Go and on-demand offerings from pay TV providers.

Netflix also recently announced a push into original movies, making deals to finance four Adam Sandler films and a sequel to the Oscar-winning martial-arts drama "Crouching Tiger, Hidden Dragon."

The world's largest video-streaming service is spending to ramp up its service in new countries.

The company expanded into six European countries, including France and Germany, in September.

Netflix's international subscribers grew 72 percent to 15.84 million from a year earlier.

Netflix's net income rose to $59.3 million, or 96 cents per share, in the quarter, from $31.8 million, or 52 cents per share, a year earlier.

Revenue rose about 28 percent to $1.41 billion.

Analysts expected a profit of 93 cents per share on revenue of $1.41 billion, according to Thomson Reuters I/B/E/S.

Netflix shares closed marginally lower on Wednesday after Time Warner's HBO said it would launch a standalone online streaming service next year to make hit shows such as "Game of Thrones" available to people who do not subscribe to cable television.

Netflix shares were down 25 percent at $333.53 in extended trading on the Nasdaq.

(Reporting by Lisa Richwine in Los Angeles and Soham Chatterjee in Bangalore; Editing by Kirti Pandey and Simon Jennings)

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