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Netflix lowers its forecast for global subscriber growth

On Monday, Netflix announced that it expected to add just 2 million subscribers outside the United States in the second quarter this year.
On Monday, Netflix announced that it expected to add just 2 million subscribers outside the United States in the second quarter this year.Elise Amendola/Associated Press/File

NEW YORK — Netflix is now available in most countries around the world, putting more pressure on the company to continue its fast-paced growth abroad as well as at home.

On Monday, Netflix announced that it expected to add just 2 million subscribers outside the United States in the second quarter this year — less than the 3.5 million analysts had expected. The figure also represents a decrease from the 2.4 million subscribers the streaming service added outside America in the same period the previous year.

Netflix attributed the lower global forecast to a tough comparison with the previous year, when it started the service in Australia and New Zealand.

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At the same time, the company said that it expected to add just 500,000 members in the United States during the second quarter of 2016 because of what it described as a “modest impact” from price increases. While Netflix characterized the forecast as “in line” with previous years — it added 900,000 subscribers in the United States during the same period in 2015 — the news sent shares down more than 10 percent in after-hours trading.

The development came on what already was a rough start to the week for Netflix. Sunday evening, Amazon created a more direct competitor to Netflix with the introduction of a new $9 monthly subscription for its Prime movie and television streaming service.

That uncertainty over the competitive landscape as well as fears about growth prospects, both in the United States and around the world, put a cloud over the generally positive first-quarter financial results that Netflix announced on Monday.

The company beat expectations for profit and revenue growth during the first quarter, after announcing in January that it was adding 130 countries to its service map.

First-quarter profits totaled $28 million, up 16 percent from the same period last year, and total revenue increased 24 percent during the quarter to nearly $2 billion.

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Netflix has told investors that it would break even until the end of 2016 as it expanded globally and increased its investment in content. The company said on Monday that it was planning to spend more than $6 billion on programming in 2017, up from $5 billion this year.

Netflix added a record 6.7 million total streaming members during the first quarter of the year.

That brings its total number of streaming members to 81.5 million, about 42 percent of those outside the United States.

Netflix had forecast that it would reach nearly 80.9 million total paid members in the quarter.

In the United States, Netflix surpassed its forecasts for subscriber growth during a period when price increases went into effect for some customers. The company added 2.23 million subscribers in the United States during the quarter, bringing its paid membership count in the country to 45.7 million.

Outside the United States, Netflix also beat its expectations for growth, adding 4.5 million international streaming subscribers. China, home to about a quarter of the world’s broadband households, remains the one major country where Netflix is not available.

Reed Hastings, chief executive of Netflix, said in a letter to shareholders that the company was continuing its discussions in China but had no material update on its approach or timing in the country.

On the fast-changing competitive landscape, Hastings said that the “market for relaxation time and disposable income is huge, and we are but a little boat in a vast sea.”

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