Netflix blew its Q2 numbers: It wanted to add 2.5 million subscribers and it only added 1.7 million.
“We are growing, but not as fast as we would like or have been,” CEO Reed Hastings said in his quarterly investor letter.
Netflix stock plummeted after the report. It’s down 16 percent right now.
Netflix missed both its U.S. and international numbers: It only added 160,000 domestic subscribers, instead of the 500,000 it projected, and it added 1.5 million in the rest of the world, instead of the two million it told Wall Street to expect.
Netflix also told Wall Street that it would added 300,000 U.S. subscribers in Q3, and another two million internationally. Those numbers are also below Wall Street’s projections.
Short story: Netflix has growth problems.
Longer story: Netflix says it added the number of subscribers it expected — but it lost more than it planned.
Why? Hastings blames the media, sort of. He says reports about the price hike Netflix is instituting this year, which raises the price of its most popular plan by a dollar a month, confused people and got them to stop paying even before their actual price hike kicked in.
“Churn ticked up slightly and unexpectedly, coincident with the press coverage in early April” of the price hike news, Hastings said. Except he doesn’t say “price hike” — he says “our plan to ungrandfather longer tenured members.” Which is a very confusing way to say “price hike,” and reminiscent of the contortions Netflix went through to avoid saying “price hike” during its Qwikster debacle in 2011 — a move Hastings eventually said he handled poorly.
Here’s the Google Trends chart Hastings links to when he refers to “press coverage,” by the way:
The good news, Hastings says, is that customers who do see their prices hiked — sorry, “ungrandfathered” — tend to stick around. He says churn of those customers is “modest and conforms to our expectations.”
Other goods news, from Hastings’ perspective: He says Netflix doesn’t seem to be losing subscribers to competitors like Amazon and Hulu. He also thinks Netflix will still be able to grow to 60 million to 90 million subscribers in the U.S., a number he has floated for some time.
One thing that won’t be happening soon: Expansion into China, where Netflix has said it would like to go, but hasn’t offered a timetable. “Unfortunately, this year the regulatory climate in China for our service has become more challenging. ... We continue to explore options and, in the meantime, have plenty of work to do in our newly opened markets.”
Hastings and his top executives will host a conference call that starts at 2 pm PT today. You can watch it live (and on-demand) here:
This article originally appeared on Recode.net.