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Netflix: Why our subscriber growth rates were disappointing

JP Mangalindan
Chief Tech Correspondent

This wasn’t Netflix’s (NFLX) best quarter for subscriber growth, but the popular streaming service doesn’t appear overly worried.

“The thing is, everybody watches TV, and nearly everybody has the Internet,” Netflix CEO Reed Hastings said during the company’s first-quarter 2017 earnings webcast. “I don’t see anything that’s going to stop Netflix from getting to most people in the United States and then eventually, hopefully, most people around the world.”

For the earnings quarter that ended March 31, Netflix added just 5 million members in total: 1.42 million subscribers in the US and 3.53 million subscribers internationally, both of which missed analysts’ estimates.

House of Cards (Source: Netflix/IMDB)

Netflix management chalked up the subscriber growth miss in part to the delay of popular original content.

“Quarter to quarter you’ll see some fluctuations, and some of that is due to the content slate,” said David Wells, Netflix’s chief financial officer.

Indeed, Netflix’s flagship series, “House of Cards,” delayed the premiere of season 5 from the first quarter to the second quarter. Other established shows, including “Orange is the New Black,” “The “Unbreakable Kimmy Schmidt,” “Bloodline” and “Master of None,” are also scheduled to return in the second quarter.

Netflix missed estimates for subscriber growth for first quarter 2017.

“We’ve said previously subsequent seasons of show that are very popular tend to have more impact on the business than introducing brand new IP [intellectual property],” explained Netflix Chief Content Officer Ted Sarandos during the webcast.

The company’s first quarter, meanwhile, was pretty heavy on new IP, with shows like the teen drama “13 Reasons Why,” and the dark comedy “The Santa Clarita Diet,” with actress Drew Barrymore.

Regardless of the quarterly miss, Hastings emphasized on the webcast he fully expected Netflix to finally cross the 100 million user mark this weekend — a milestone Hastings has talked about in recent quarters.

“We definitely see an incredible opportunity around the world,” Hastings added.

JP Mangalindan is a senior correspondent for Yahoo Finance covering the intersection of tech and business. Follow him on Twitter or Facebook.  

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