Netflix Shares Take Dive Over Subscriber Woes

Shares in the video streaming service Netflix plunged 27% in extended New York trading after weak quarterly subscriber growth was blamed on price increases.

The third quarter results showed that while Netflix added three million worldwide subscribers during the three months ending in September, the gains missed management's projections of an additional 3.7 million subscribers for the period.

In its crucial US battleground, Netflix added about one million subscribers, missing the target of 1.3 million set by the company.

The $1-per-month, or 13%, price increase - imposed on US customers five months ago - was seen as the driving force behind the weakness.

Chief executive Reed Hastings said in his quarterly letter to shareholders: "Slightly higher prices result in slightly less growth".

The disappointing performance spooked investors already on edge after Netflix rival HBO announced plans for an internet-only package in the US beginning next year.

Netflix's stock plunged $117.59, almost 27%, to $331 after hours and such a move would wipe nearly $7bn (£4.4bn) of value from the company if the downturn is mirrored in Thursday's regular trading session.

Shares had risen 22% this year ahead of the results.

Analysts said slowing subscriber growth could eventually affect Netflix's ability to pay for high-quality programming such as its critically acclaimed series "House of Cards" and "Orange Is The New Black".

The second seasons of those series both came out during the first half of the year, when Netflix's subscriber gains beat analysts' projections.

"House of Cards" is due to return next year and Netflix also recently announced a four-film deal with Big Daddy star Adam Sandler.

Netflix is also facing fiercer competition from the likes of Amazon, which also recently raised its prices, and Hulu though there is no evidence it is losing ground on them.

The company ended September with 37.2 million US subscribers.

Netflix's debut in France and Germany last month helped the company pick up two million subscribers in international markets.

That left Netflix with nearly 16 million subscribers outside the US.