Netflix shares plunge on subscription slowdown

Video streaming service blamed recent price hike for disappointing subscription growth

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The Independent Online

Shares in Netflix plunged after the online streaming service revealed it added fewer subscribers than expected citing a recent price hike in the United States.

The stock fell as much as 26 per cent in after-hours trading on Wednesday after the company said it added 980,000 new customers in the US, down from 1.29 million in the same period a year earlier.

Going into the fourth quarter, Netflix expects to add 1.85 million new customers in the US, compared with the 2.33 million it added in the fourth quarter last year.

In a letter to shareholders, Netflix blamed its recent $1 price hike, which raised the cost of a subscription to $8.99 per month for US customers, for the slowdown.

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"Year-on-year net additions in the US 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 added.

Internationally, Netflix added two million new customers after taking on an aggressive expansion strategy in Europe, including Germany, France and Belgium. The streaming giant said its international markets are now collectively profitable.

Netflix has invested in original series such as House of Cards and Orange is the New Black to compete with rivals such as HBO, and recently announced plans to produce original film content.