Netflix Experiences Slow Subscriber Growth After Pandemic Boom, Shares fall 11%
Netflix subscriber growth has been falling, and slower movie and Tv show production during the pandemic is one of the main reasons. There was a significant fall in the number of subscriptions, as well as in the company’s shares that went down by 11% in the first quarter.
Nearly 3.98 million people signed up for the world’s largest streaming service between January and March, below the 6.25 million average projection of analysts surveyed by Refinitiv.
It was estimated by Netflix that in the second quarter, it would only add 1 million new streaming users. Whereas, a forecast of roughly 4.8 million was expected by Analysts.
The company’s shares plummeted by 11% in after-hours trading to $489.28, resulting in a loss of $25 billion off the company’s market capitalization. There has been a 27% increase in Netflix’s stock since the past year, compared with a 65% rise in the tech-heavy Nasdaq Composite Index.
“It’s just a little wobbly right now,” said Reed Hastings, Netflix co-CEO Reed Hastings.
The company expects a boost in subscriptions during the second quarter of the year, when new seasons of popular shows including The Witcher, Money Heist and You are scheduled to be released.
Last year, more than 15.8 million users subscribed to the service as the lockdowns forced people to stay home. On Tuesday, the company stated that film and Tv show productions around the world were halted due to Covid-19.
“These dynamics are also contributing to a lighter content slate in the first half of 2021, and hence, we believe slower membership growth,” Netflix expressed in its quarterly letter to shareholders.
Analysts expect people to spend less time watching shows and movies at home as the public starts to get vaccinated, returning to their daily life routines.
The inevitable decrease in subscriber growth had been widely addressed, in repeated reminders, by the company’s team; that its gains were a pandemic-driven anomaly.
Moreover, Netflix monthly subscription fee also increased in Japan, Germany, Britian, and Argentina during the first quarter. The total number of new subscriptions was 360,000 in Latin America, 1.36 million in Asia, and 1.8 million in Europe.
“What wasn’t expected was the strength of the slowdown in international markets, where competition is significantly lower,” said eMarketer analyst Eric Haggstrom.
The big question is how much drop in the subscriber count will the company experience this year, as compared to last year’s full-year increase of 37 million subscribers worldwide — the largest digits that the company experienced since it expanded its DVD-by-rental service into video streaming 14 years ago.