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October 15, 2015

Netflix must look overseas as US growth flags

News: Revenues rise at the streaming giant.

By Alexander Sword

Netflix saw slowing US subscriber growth in Q3, while revenue and profit growth continued.

Overall revenue rose from $1.223 to $1.581 billion year-on-year, a 29 percent rise.

Contribution profit rose to $277 million from $220 million.

US subscriber growth was considerably lower than it had been in previous quarters, declining to 880,000. This represents a fall year-on-year from 980,000 and 900,000 sequentially.

Internationally, the on-demand video service saw 2.74 million new additions, an increase of 34 percent year-on-year.

Paolo Pescatore, Director, Multiplay and Media at CCS Insight said:

"This is a result of the US competitive landscape intensifying and the arrival of new online video services such as Sling TV. In response to this, even content owners have launched their own direct to consumer services such as HBO with HBO Go and CBS with Showtime."

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Pescatore said: "These latest results reinforce that its future growth lies in overseas expansion. However, the principal obstacles will be the amount of investment needed to secure rights for each country and how quickly it can come profitable in each market.

He also suggested that an acquisition was on the cards.

"Regardless, we still believe that Netflix is a prime takeover target. All Web players are looking for a stronger presence in paid-for video, something Netflix has achieved with remarkable success – potential suitors include Apple, Alibaba and Google."

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