Netflix, the world's largest video-subscription service, reported its first quarterly in seven years loss as content fees and international-expansion costs took their toll on the bottom line.
The company said it had added 1.74 million new U.S. online subscribers in the first quarter, much faster growth than in the fourth quarter, for a total of 23.4 million streaming customers in the U.S. But it warned that customer growth may slow.
CEO Reed Hastings is racing to add streaming customers to confront competition from Comcast's Streampix service and Verizon's venture with Coinstar's Redbox for an online product. Netflix has commitments to spend $3.9 billion over the next five years on films and TV shows, according to filings.
The company's first-quarter net loss totaled $4.58 million as Latin American and U.K. expansion expenses added up. But that was smaller than the loss of between $9 million and $27 million the company had predicted in January. Revenue rose 21%, to $869.8 million, beating the $865.5 million average of 27 analysts' estimates.
Analysts and investors say Netflix's domestic streaming business may stall this year, when the company needs additional revenue to stay ahead of new competitors and counter unprofitable growth overseas, including continued losses in Latin America.
For the second quarter, domestic online users will increase to between 23.6 million and 24.2 million, suggesting an increase of as much as 800,000, while DVD users will shrink to as few as 8.95 million from 10.1 million in the first quarter.
The company may make money in the second quarter. Netflix said net could range from a loss of as much as $6 million to a profit of $8 million.
-- Bloomberg News --