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Netflix Subscriber Growth Stumbles, Company Blames Content Slate

Photo of PS3 XMB with Netflix App
Sean Fang Mon, 22/07/2019 - 16:49

Netflix has suffered its first loss of domestic (U.S.) subscribers in a set of quarterly results that has investors spooked.

Netflix suffered a net loss of 126,000 subscribers in the crucial U.S. market in Q2, completely missing the projection of 300,000 new subscribers. Internationally, Netflix did manage to grow 2.8 million new subscribers but this was way down compared to the predicted growth of 4.7 million.

While Netflix's second-quarter results were disappointing, to say the least, annually, Netflix's subscriber base still grew at a healthy rate. In the U.S, the number of paid Netflix subscribers went up from 56 million to 61.1 million from Q2 of 2018 to Q2 of 2019, while internationally, 68.4 million became 91.5 million.

Interestingly, Netflix's disc-by-mail service is still operating and operating at a profit (of $45.8 million), despite a drop from 2.9 million subscribers last year to 2.4 million this year.

Netflix CEO Reed Hastings attributed the below expectation Q2 results on the fact that Q1 results were above expectation and the content slate was not so that would have kept the subscriber rate up. Growth in markets where price rises had occurred was perhaps more subdued, but Hastings did not point to increased competition as a cause for the results.

"We don’t 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)," Hasting wrote.

Media companies Disney and Warner have both announced their own streaming platforms which will go head-to-head with Netflix, launching at the end of 2019 and in 2020 respectively.

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