Credit card industry hits back at Netflix over blame for subscriber problems
Netflix has come under fire from the credit card industry after claiming its disappointing user growth was the result of processing problems stemming from US banks replacing its subscribers’ cards with chip-enabled ones.
The streaming service fell short of its 1.15 million third quarter growth forecasts by 270,000 and attributed the failure to the move by many US banks to roll out new chip and pin cards which led to involuntary service cancellations.
Credit card industry executives and experts have disputed the claims saying that such a problem has not surfaced in any other subscription based businesses.
Henry Helgeson, chief executive of financial services business called Cayan, described Netflix’s claims as “curious” because other businesses were not experienced the same problem.
Speaking to the WSJ, Helgeson, said “I would be surprised if this was an issue in the industry right now and we’re only hearing about it from Netflix”.
The WSJ cited one card-industry executive who said “if this was an issue, it would be affecting every subscription-based business and it isn’t”.
Nomura Securities analyst, Anthony DiClemente, pointed to reasons other than card payment problems for missing the targets. He said it may be due to “the fact that there may be, over a longer period of time, a slowdown in US subscriber growth because the base of subscribers is scaling to such a large degree that it becomes difficult to keep up”.
On Wednesday Netflix executives dispelled rumours that the lacklustre subscriber figures could actually be a sign that its business has matured faster than expected and said they believe the company could reach 60 to 90 million domestic customers.
The stagnating user growth coincides with the company’s decision to raise its fees for new users by $1 a month.