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October 16, 2015

Netflix blames new bank cards for poor US growth

News: Company only added 0.88 million US subscribers.

By CBR Staff Writer

Netflix has blamed the transition to chip based cards by banks as a reason for the slowing down of its quarterly US subscriber growth.

The company said that it relies on monthly payments from customers and several customers did not update their credit card data, which led them to file payment using old cards which did not work.

US lenders have sent out new debit and credit cards with security chips ahead of an industry-imposed Oct 1 deadline.

Netflix said it added 0.88 million US subscribers compared with its forecast of 1.15 million.

In a letter to its shareholders Netflix wrote: "While global growth was as we expected, our forecast was high for the US and low for international.

"We added 0.88 million new US members in the quarter compared to 0.98 million prior year and a forecast of 1.15 million.

"Our over-forecast in the US for Q3 was due to slightly higher-than-expected involuntary churn (inability to collect), which we believe was driven in part by the ongoing transition to chip-based credit and debit cards."

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Music streaming site Spotify along with web-based marketplace Care.com, and online tutoring company Chegg however claimed that they did not face any problem related to transition through chip-based bank cards.

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