The introduction of the new credit and debit cards, designed to help prevent fraud, was one of several factors weighing on signups during the quarter, Hastings and Chief Financial Officer David Wells said on a video conference call. That change interrupted the payment system used by Los Gatos, California-based Netflix and its customers, leading to what Hastings in his letter called an “inability to collect” from customers who hadn’t updated their account information. The result was more-than-expected turnover among subscribers, or “involuntary churn.”
Source: Netflix Blames Chip-Based Credit Cards for U.S. Growth Shortfall – Bloomberg Business