Netflix’s subscriber growth from first quarter to second quarter was always going to be bad, as many ‘grandfather’ customers are faced with price hikes after enjoying many years of cheap streaming.
This is according to IHS Technology’s senior analyst Jonathan Broughton, who says these price hikes now place Netflix into a similar price category as it competitors.
Since the grandfather deals have ended, Netflix will have experienced an increase in ARPUs and a revenue growth, which outstrips subscriber growth.
International markets are more competitive, especially in important countries such as the UK, where Amazon and NowTV offers are increasingly well targeted to lower-end consumers.
However, in the Nordic region, Netflix is still growing very strongly and is expected to be taken in more than 50% of households by the end of 2017.
Netflix has been slow to invest in international content, even in larger countries, and this has stalled growth. Local content has been cited as key to expansion in international markets and pulling back from this may be detrimental to the company outlook outside the US and UK.
Netflix has stated that Poland and Turkey will experience localisation although other, smaller markets will not receive this treatment any time soon.
Although subscriber growth slowed substantially, the service is still growing. As the majority of churned customers are resultant of grandfather deals, and gross additions were on target, IHS expects Netflix to return to strong growth in the near future.