Netflix appears to have driven away customers with its latest price hike. However, it’s still growing overall.
The company’s figures for the second quarter show it increased its US subscriber base by 160,000 and its worldwide number by 1.5 million. The problem is that it had forecast figures of 500,000 and 2 million respectively. It’s now reduced forecasts for the next three months, albeit still showing growth.
The problem isn’t a failure to attract new customers: Netflix says it added pretty much just as many as it expected. Instead the lower-than-expected figures are because of cancellations. The implication is that 340,000 US customers and 500,000 worldwide customers have cancelled in the past three months.
Recode reports Netflix chief Reed Hastings has told investors the problem isn’t so much the price rises that affect long-term customers this year, but rather media reports which he says may have confused customers into cancelling before the hikes even took effect. That’s not necessarily good news either as it implies there may still be a sizable chunk of cancellations to come as the price rise completes its rollout.
The letter never explicitly refers to price rises and instead uses the wonderful euphemism of “plan to un-grandfather longer tenured members.”