Netflix starts its year with underwhelming first quarter earnings

Netflix said Tuesday it is shutting down its DVD delivery operation, ending its original business after a 25-year run. The company cited the cost of operating it after years of seeking customers move online.

The company has been testing ways of charging customers for sharing accounts in Latin America, and rolled out plans in four territories in the first quarter. It said it would begin to charge for password sharing in the US, its largest market, in the next couple months. Analysts see this as a large potential source of new customers.

The advertising tier debuted in November but has yet to contribute a material number of subscribers. The company had said that both advertising and password sharing will offer modest contributions in the first quarter of the year but would pick up in the current period. Foreign territories accounted for almost all of Netflix’s growth in the quarter. The service added just 100,000 customers in the US and Canada after losing almost 1 million customers last year. The Asia-Pacific region continues to be Netflix’s bigger source of new customers. The service added 1.46 million customers there in the quarter, thanks in part to lowering prices in India. It lost subscribers in Latin America, a development that could be the result of the crackdown on password sharing.

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