Earlier this month Netflix upset many of its customers after changes to its price plans, which saw prices going up for those who still wanted the same level of service. Now the company has just posted its second quarter earnings which have shown only a reasonable rise in subscriber numbers, so does this mean Netflix face tough times ahead despite Facebook integration?
The company even expects subscriber numbers to grow even slower during the next quarter due to the recent pricing structure change. According to an article on Business Insider the company is planning on launching Facebook integration but only outside the US.
Subscribers in the US totaled 24.6 million with numbers around the rest of the world were around another million. This was in line with expectations but the company only gained around two million new subscribers, which was its lowest figure since the third quarter of 2010.
Customers signed up on its hybrid plans of DVD and streaming dropped a small amount during the quarter. These results are from before Netflix put their prices up, and Netflix has written to its investors saying they expect some users to cancel or downgrade their subscriptions. But they think the majority of users will remain with the company as “each of our $7.99 plans is an incredible value”.
But a good thing for the company is almost 75 percent of new customers has signed up to the streaming only plan. This will lower the over heads for the company and keep profit margins larger. The company does think its DVD rental arm has probably peaked, and expects to have 12 million DVD+ and 10 million streaming only customers by the end of the next quarter. This compares to only 3 million DVD only customers.
Netflix are looking to add more content available to customers as they sign new deals with various companies. The Facebook integration is expected to launch before the next quarter’s earnings are reported, but won’t be available in the US due to legal restrictions.
Trouble is do Netflix have to worry about other services which are available? There have been rumors reported recently that Apple may be bringing out a new service to coincide with an Apple branded HDTV. Apple is also thought to be looking at purchasing Hulu which are one of Netflix’s biggest rivals.
Do you think that Netflix has to start worrying about rival services stealing market share?
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