Netflix loses US subscribers, growth slows elsewhere
Comes and goes
The most recent quarterly earnings report shows the loss of 130,000 subscribers Stateside and overall subscriber growth starting to fall below projections.The Q2 period of April 01st - June 30th returned the US company’s second only ever drop in home turf subscribers, which was tempered by an overall increase of 2.7 million members - itself falling short of the predicted 5 million they were expecting to gain.
The company’s shares took a hit on the news but it’s likely Netflix won’t be too concerned by these figures, they are after all a single data point and will only have more detailed meaning when placed in context with information from subsequent reports. Coming amidst a subscriber base that now surpasses 150 million worldwide and with record breaking viewing figures for flagship content such as Stranger Things 3 released after the Q2 period, there’s still a fair amount of boom amongst the gloom.
In the accompanying letter to shareholders, the company itself stated that the period coincided with a slow release schedule and admitted that the regions that had undergone recent price increases had returned the highest slowdown - no doubt the sort of kickback that companies most likely expect after such a move.
Q1’s stellar 9.6 million new customers could also be seen to paint the recent numbers in an unfair light, unfairly raising expectations.
The company statement went on to reiterate that they were in a strong position and the figures were not a result of the upcoming competition from the likes of Apple, Disney and WarnerMedia. Nor were they a consequence of the impending loss of some fan favourite third party content due to leave the service in the coming months.
Instead, this was portrayed as an opportunity to add further new programming in line with the company’s overall strategy of creating original TV shows, movies and documentaries to attract new customers.
Ted Sarandos, chief content officer said “content comes and goes,” and that Netflix will focus instead on convincing users that “we’re going to create their next favourite show”.
The streaming giant is aiming for 7 million new subscribers in the Q3 period which is expected to be boosted by the success of Stranger Things 3 and offerings such as the Adam Sandler vehicle Murder Mystery.
Chief Executive, Reed Hastings, stated in a video call with analysts, “I think our position is excellent,” he went on, “We’re building amazing capacity for content. Our product has never been in better shape.”
Not everyone agrees with this assessment, Clement Thibault, analyst at financial markets platform Investing.com said, “Even though we expected slowing user growth in the U.S., a negative paid net additions number is shocking.” He added, “The problem is that with intensifying competition, there is no guarantee Netflix has the pricing power needed to raise prices without massively bleeding users.”
Netflix also took the opportunity to pour water over speculation that an ad based tier was being considered, preferring to stay as a commercial free entity, stating, "When you read speculation that we are moving into selling advertising, be confident that this is false." The company further explained, "We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction."
So Netflix is looking pretty bullish about their current situation, are they right to? Have subscribers sent a message to Netflix about the recent prices rises and should the company listen? Or is all this just wrinkles in the sheets that will smooth out? Let us know in the discussion thread.
Source: www.trustedreviews.com, www.cnet.com, www.reuters.com
Image Source: Tellerreport.com
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