Netflix tests limits of price increases for original shows

Netflix tests limits of price increases for original shows

For Q4, Netflix expects domestic subscriber growth of 1.45 million versus Wall Street's forecasts of 1 million.

The Los Gatos, Calif., company also reported third-quarter earnings of 12 cents a share, significantly beating estimates of six cents a share from analysts polled by FactSet Research Systems, while revenue climbed to $2.16 billion, up from $1.58 billion from the same period past year.

Netflix credited its huge beat on subscriber additions to "excitement around Netflix original content". Its Q2 report was disappointing for investors. It also faces competition from the likes of Hulu and Amazon.com Inc (AMZN.O).

"We are now in the fourth year of our original content strategy and are pleased with our progress". Netflix, which has spent heavily to expand outside its home market, also said that it was on track to start harvesting "material global profits" next year, even as it raised spending on original programming.

Given the dramatic increase in subscribers, it's clear that streaming video for TV is still a viable business model with room to grow. The company said that the country's regulatory environment has become challenging.

For the current quarter, Netflix projected earnings of 13 cents a share, compared with the average analyst estimate of 7 cents a share, according to Thomson Reuters.

Subscriber growth has been a consistent worry for much of the year.

Anmuth said he believed Netflix was on track toward 60 million plus subscribers in the United States and about 100 million internationally by 2020.

This quarter, Netflix forecasts USA subscriber gains of 1.45 million, compared with the 1 million average of analysts' estimates, and worldwide additions of 3.75 million, compared with a 3.1 million estimate. Analysts had predicted it would add 309,000 and 2.0 million subscribers, respectively. "With more revenue, we can reinvest to further improve Netflix to attract new members from around the world, while continuing to delight our existing customers", founder Reed Hastings said in a letter to investors. Analysts had expected the company to report about $2.28 billion in revenue (up from $1.74 billion last year) and $0.06 earnings per share (up from $0.07).

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