Netflix Subscriber Growth Declining After The Pandemic Boost In 2020

Netflix shares fell over as much as 13% on Tuesday, after the streaming giant revealed that it had added only 3.98 million subscribers worldwide during the first quarter of 2021, compared to an average analyst estimate of 6.29 million and its own prediction of 6 million.

  • Number of subscriber additions fall far short from Wall Street predictions.
  • Competition not a contributing factor in the slump.
  • A lack of upcoming shows can prove to be a reason.

Netflix credited the pandemic with producing record growth in 2020. Now the pandemic has proved to be responsible for the worst first quarter in eight years.

Earlier this year, Netflix co-CEO Reed Hastings, said on the post-earnings video interview that the company has a lot more headroom for growth. Even in the U.S., where it has the highest household penetration of about 60%, Netflix is still under 10% of total TV viewing time. For January through March, Netflix projected it would sign up 6 million more global subscribers, behind analyst expectations of roughly 8 million. The company says it predicts to add only 1 million new subscribers for the present quarter.

The streaming platform added far fewer new customers than Wall Street predicted in the first three months of 2021, even missing its own projection by millions of subscribers.  In its quarterly letter to the investors, Netflix condemned a “Covid-19 pull-forward” effect, implying the pandemic stimulated its growth in 2020 while everyone was stuck at home and needed something to watch. Now that rise is taking a toll on the company’s 2021 outcomes.

Netflix Subscriber Growth Declining after the Pandemic Boost in 2020
Graph of Global Paid Net Adds

The platform has been warning for months that growth would slow after customers emerged from their Covid-19 hibernation. However, few expected the company to stall so dramatically. The first quarter of 2020 was the greatest in its history, rolling in 15.8 million new customers. Netflix’s pace was still brisk in the fourth quarter.

The quarter marked the weakest start of a year since 2013 (when Netflix added about 3 million customers.) If the company’s projection for the current quarter holds, it will be the worst three-month span for Netflix since the initial days of its streaming service.

Netflix Subscriber Growth Declining after the Pandemic Boost in 2020
Netflix

“It really boils down to Covid,”

Spencer Neumann, the company’s chief financial officer

One aspect that the company insists was not a factor is competition from other streaming platforms like Disney+, Paramount+, Peacock etc. Hastings mentioned that they “looked through the data” to make sure competition wasn’t a factor in the miss. However, an absence of new shows contributed to the recession, the company said. After popular hits like “Bridgerton” and “Cobra Kai,” fresh releases tailed off after mid-January and growth faltered.

About Netflix

Netflix, Inc. is an American content platform and production company headquartered in Los Gatos, California. Netflix was founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California. The company’s primary business is a subscription-based streaming service offering online streaming from a library of films and television series, including those produced in-house.

Epic Dope Staff

Epic Dope Staff

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