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For the first time, Netflix lost subscribers in the U.S. — dropping 130,000 — and added fewer international customers than expected, sending the stock tumbling.

Paid subscribers grew by 2.7 million, including 2.83 million internationally, far less than Netflix’s previous guidance of 5.0 million net adds. Netflix’s previous guidance of 300,000 in the U.S. and 4.7 million for the international segment.

Netflix shares dropped more than 11% in after-hours trading. The company said the Q2 results were the result of a weaker content slate in the quarter, which drove fewer paid net adds than anticipated.

For Q3, Netflix said it expects to add 7 million paid memberships, more than the 6.1 million in Q3 a year ago. “Consumers around the world continue to move from linear television to internet entertainment at a remarkable rate,” the company said in its letter to shareholders.

The Q2 results include the effects of Netflix’s U.S. price increases, where the Standard two-HD stream plan rose from $10.99 to $12.99 per month, a price hike that was completed during the quarter. The company also is rolling out price increases across Europe including in the U.K., Spain, France, Ireland and Germany.

“Our missed forecast was across all regions, but slightly more so in regions with price increases,” the company said in its letter to shareholders. “[We] believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions (while our over-forecast was in every region). Rather, we think Q2’s content slate drove less growth in paid net adds than we anticipated. Additionally, Q1 was so large for us (9.6m net adds), there may have been more pull-forward effect than we realized. In prior quarters with over-forecasts, we’ve found that the underlying long-term growth was not affected and staying focused on the fundamentals of our business
served us well.”

Netflix posted revenue of $4.92 billion and earnings of 60 cents per share. Wall Street analysts on average had forecast earnings of 56 cents per share on $4.93 billion in revenue for the period.

In the year ahead, Netflix will face significant new competition, with Disney Plus and Apple TV Plus slated to debut in the fall and streaming services from WarnerMedia and NBCUniversal on tap for 2020.

With the traditional media giants rolling into its space, Netflix also is set to lose popular licensed shows like Friends (to WarnerMedia’s SVOD service) and The Office (to NBCU’s). Currently, content from NBCU, Disney/Fox and Warner Bros. accounts for 60%-65% of Netflix’s viewing hours, and over time much of that will be pulled back, according to Wedbush Securities analyst Michael Pachter. “[W]e expect the migration of third-party content to be relatively slow,” he wrote in a note last week. However, “it is unclear whether Netflix can replace it with quantity and quality sufficient to keep its current subscriber base loyal.”