The fall in the number of US subscribers for the video-streaming service provider Netflix Inc is blamed on a transition to chip-based cards.
The company reported lower subscriber in the third quarter which was well below its forecast.
Netflix is known for its original shows such as "House of Cards" and "Orange is the New Black". The value of the shares of the company declined by about 15 percent on Thursday, picking up by 2.4 percent later on in the day.
A new regulation in the US entails the credit and debit card companies to shift for traditional cards to new chip-enabled cards before October 1.
Many of the older cards for Netflix, no longer worked as the companies gave new cards to their customers due to the switch which led to "involuntary churn," as Chief Executive Reed Hastings put it in a letter to shareholders.
"It's just the dumbest thing I've heard," Wedbush Securities analyst Michael Pachter said.
The issue around the chip cards is particularly confusing, given that these cards have been around for a bit, said FBR Capital Markets analyst Barton Crockett.
"It begs a million questions," he said.
Netflix added 0.88 million U.S. subscribers in the third quarter ended September 30, compared with its forecast of 1.15 million, the company said.
"The slowdown in U.S. subscriber growth was particularly disappointing because one would expect that since Netflix just raised rates last week, this number would have been strong," said Crockett.
The subscription rate for some new members in the United States, Canada and Latin America were raised by Netflix earlier this month by $1.00 a month to $9.99.
Compared with its projection of 2.40 million, the company managed to add 2.74 million subscribers internationally.
Faced with stiff competition from streaming services such as Amazon.com Inc's Prime Video service and Hulu, Netflix has been aggressively building its overseas presence and trying to increase subscribers and revenue.
The company said it was in the "early stages" of its China entry and said it was "still learning a lot".
Netflix said in July its plans to enter China in 2016 could be delayed.
On a post opening conference call, company executives said that Netflix is being "more adventurous" on the news side.
Live sport was not on the agenda of the company, officials said.
"There's a lot of irrational bidders for sports, we're not anxious to become another one. Sports on demand is not as exciting as sports live," Netflix's head of content Ted Sarandos said.
Netflix has predicted an addition of about 1.65 million new customers in the United States in the current quarter and around 3.50 million subscribers worldwide in the same period.
(Source:www.reuters.com)
The company reported lower subscriber in the third quarter which was well below its forecast.
Netflix is known for its original shows such as "House of Cards" and "Orange is the New Black". The value of the shares of the company declined by about 15 percent on Thursday, picking up by 2.4 percent later on in the day.
A new regulation in the US entails the credit and debit card companies to shift for traditional cards to new chip-enabled cards before October 1.
Many of the older cards for Netflix, no longer worked as the companies gave new cards to their customers due to the switch which led to "involuntary churn," as Chief Executive Reed Hastings put it in a letter to shareholders.
"It's just the dumbest thing I've heard," Wedbush Securities analyst Michael Pachter said.
The issue around the chip cards is particularly confusing, given that these cards have been around for a bit, said FBR Capital Markets analyst Barton Crockett.
"It begs a million questions," he said.
Netflix added 0.88 million U.S. subscribers in the third quarter ended September 30, compared with its forecast of 1.15 million, the company said.
"The slowdown in U.S. subscriber growth was particularly disappointing because one would expect that since Netflix just raised rates last week, this number would have been strong," said Crockett.
The subscription rate for some new members in the United States, Canada and Latin America were raised by Netflix earlier this month by $1.00 a month to $9.99.
Compared with its projection of 2.40 million, the company managed to add 2.74 million subscribers internationally.
Faced with stiff competition from streaming services such as Amazon.com Inc's Prime Video service and Hulu, Netflix has been aggressively building its overseas presence and trying to increase subscribers and revenue.
The company said it was in the "early stages" of its China entry and said it was "still learning a lot".
Netflix said in July its plans to enter China in 2016 could be delayed.
On a post opening conference call, company executives said that Netflix is being "more adventurous" on the news side.
Live sport was not on the agenda of the company, officials said.
"There's a lot of irrational bidders for sports, we're not anxious to become another one. Sports on demand is not as exciting as sports live," Netflix's head of content Ted Sarandos said.
Netflix has predicted an addition of about 1.65 million new customers in the United States in the current quarter and around 3.50 million subscribers worldwide in the same period.
(Source:www.reuters.com)
