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Friday, October 16, 2015 7:40:05 AM
While global growth was as we expected, our forecast was high for the US and low for international. We added 0.88 million new US members in the quarter compared to 0.98 million prior year and a forecast of 1.15 million. Our over-forecast in the US for Q3 was due to slightly higher-than-expected involuntary churn (inability to collect), which we believe was driven in part by the ongoing transition to chip-based credit and debit cards. In terms of US net additions, through the first nine months of 2015, we are slightly ahead of prior year, and we expect to finish 2015 at about 2014 levels. This would mark the 4th consecutive year we’ve added about 6 million members in the US.
Our US contribution margin in Q3 expanded 375 basis points year over year to 32.4%. This was inclusive of an acceleration in the amortization of some of our licensed content, similar to how we already treat originals and reflecting more viewing in the first month. The effect of this change was a $13 million decrease in US streaming contribution profit in Q3. For Q4, we anticipate 1.65 million US net adds and US contribution margin of 34.0% vs. 28.0% in the year ago quarter. We continue to target a 40% US contribution margin by 2020.
International net add growth totaled 2.74 million compared to 2.04 million in the prior year and a 2.40 million forecast. Excluding the impact of foreign currency ($96 million on a year over year basis), international ASP improved 6% vs. Q3 ‘14, helped by plan mix. In August, we raised our high-definition 2-screen monthly price plan in Europe by one Euro without negatively impacting growth.
As we have indicated previously, international contribution losses will grow sequentially in Q4 as we launch Spain, Italy and Portugal. We have announced our expansion to South Korea, Hong Kong, Taiwan and Singapore in early 2016. Our plan remains to run around break-even through 2016 and to deliver material profits thereafter.
Last week we increased prices in several countries including the US, to improve our ability to acquire and offer high quality content, which is the number one member request. Our US pricing is now $7.99 for our standard-definition 1-screen-at-a-time plan (unchanged), $9.99 for our high-definition 2-screen plan (up $1), and $11.99 for ultra-high-definition 4-screen plan (unchanged). Members who were paying $8.99 for the high-definition plan are grandfathered at that price for one year.
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