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Netflix Subscriber Count Rises, but Growth Slows at Home

Netflix ended March with 148.9 million paying subscribers around the globe, surpassing its forecast of 148.2 million for the period. By that tally, it tops other subscription video services such as HBO and Hulu.

Shares of Netflix have surged 34% so far this year, but slipped 0.5% in after-hours trading Tuesday.

A scene from the Academy Award-winning Netflix film ‘Roma.’ Photo: Carlos Somonte/Netflix/Associated Press

TheLos Gatos, Calif.-based company helped to pioneer the streaming-video industry, growing rapidly as Americans canceled cable subscriptions and as it developed content meant to appeal to consumers around the world. One of its films, “Roma,” a Spanish-language drama, recently won an Academy Award for best director.

Netflix is going to be facing increased competition in the coming months, particularly from Walt Disney Co. , Apple Inc., and AT&T Inc., which now owns HBO.

In its letter to shareholders, Netflix said Tuesday there is enough audience to go around for everyone. “We believe there is vast demand…and Netflix only satisfies a small portion of that demand,” the company said.

Last week, Disney unveiled details for its new streaming service Disney+ which will launch in November. The platform will feature both new and classic Disney fare including “Star Wars” and Marvel content as well as family programming. The monthly price tag will by $6.99, around half the cost of Netflix’s most popular streaming option.

Disney executives predicted the service would have between 60 million and 90 million subscribers in five years, with much of the gains coming from outside the U.S.

Apple has also provided some details for its entry into the television distribution and content space. Last month, Apple announced deals with several programmers including HBO and CBS Corp.’s Showtime to distribute their content as well offer its own original shows.

Unlike Disney, Apple hasn’t yet said what the pricing options will be for its television service.

AT&T’s WarnerMedia and Comcast Corp.’s NBCUniversal are also moving ahead with ambitious streaming services. Earlier this week, AT&T said it was selling its stake in Hulu, valuing the video site at roughly $15 billion, and will focus on a streaming service that is expected to launch in the fourth quarter.

Besides additional competition for subscribers and viewing time, the push by Disney, WarnerMedia and NBCUniversal will put pressure on Netflix’s programming team to develop more breakthrough exclusive content. As it did last quarter, Netflix again selectively released some viewing information for its original content. Netflix said its latest superhero show, the quirky “The Umbrella Academy” has been watched by 45 million member households in its first month on the platform.

Netflix still relies heavily on TV shows from outside suppliers such as “Friends” from Warner Bros. and “The Office” from NBCUniversal. As those companies start to launch their own services, they are expected to reduce how much of their content they sell to Netflix.

In January, Netflix said it was raising prices for all of its subscription plans. Its most popular plan, which allows users to stream on two screens at the same time, now costs $13 a month, up from $11. The company last raised its prices in late 2017.

Netflix is expected to release new seasons of its hit programs such as ‘Stranger Things’ later this year. Photo: Netflix/Associated Press

Netflix said Tuesday it expects to add another five million paid subscribers in the second quarter, including about 300,000 in the U.S. The service is expected to release new seasons of hit programs, including “The Crown” and “Stranger Things” later this year.

Higher subscription fees will help bolster a business that continues to spend heavily to woo creative talent to its streaming service and acquire the rights to films and TV shows. Netflix spent $12 billion licensing and creating content last year. In the latest quarter, Netflix reported profit rose to $344 million, from $290 million a year earlier. Revenue rose 22% to $4.52 billion. That increase marked the fourth straight quarter Netflix has reported slower sales growth, but the revenue total was better than the $4.5 billion than analysts polled by FactSet expected.

At the same time, the company has raised the bar for success. It has been more aggressive toward canceling shows lately, including the comedies “Friends From College” and “One Day at a Time.”

Write to Joe Flint at joe.flint@wsj.com and Micah Maidenberg at micah.maidenberg@wsj.com


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