Netflix price rises prompt subscribers to turn off

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Netflix logo on a laptop screenImage source, Getty Images

Netflix shares fell sharply after the video streaming firm added fewer subscribers than expected ahead of US prices rises.

The company added 1.68 million users in the three months to June - well below its forecasts of 2.5 million.

Subscriber cancellations rose "slightly and unexpectedly" ahead of higher charges for existing users.

The numbers sent Netflix shares down 13% to $85.90 in after-hours trading in New York.

If that loss extends when Wall Street opens on Tuesday, the stock will have lost about a quarter of its value this year.

Netflix shares are often subject to big swings as investors bet on its drive to redefine global television viewing habits.

Wedbush Securities analyst Michael Pachter said: "The shares are down because their domestic subscriber growth slowed to a crawl ... and domestic profits fuel their international losses."

Netflix admitted that growth had slowed both in the US and international markets: "We are growing, but not as fast as we would like or have been."

Analysts estimate that about 20 million subscribers may be forced to pay between $1 and $2 more a month by the end of this year.

Image source, AP
Image caption,
The Unbreakable Kimmy Schmidt is a Netflix sitcom

Netflix said the increases were one reason why the company will add just 300,000 US subscribers in the three months to September - far fewer than the 880,000 added in the same period last year.

Revenue for the quarter rose 28% to $2.1bn, driven partly by Netflix's higher prices.

The streaming service, best known for shows such as Orange is the New Black, House of Cards and the Unbreakable Kimmy Schmidt, is now available in almost every country. However, it is facing competition from rival services such as Amazon Prime and Hulu.

Netflix also faces the challenge of localising or adapting its offerings to different countries and cultures.

It remains shut out of China due to what it called a "more challenging" regulatory environment.

The mainland does not yet permit streaming services from Disney or Apple either.