Netflix is seeing a slowdown in new subscriptions as the company offers fewer shows after a year of delayed productions. The company now has 208 million paid subscribers worldwide, up from 204 million in the previous quarter. It’s not much to complain about, but it’s a significant slowdown compared to the rapid growth that Netflix saw during the same period in 2020 when it added four times as many new subscribers.
It’s also fewer subscribers than Netflix had hoped. The company believed it would get 210 million subscribers by the end of the first quarter, but that was 2 million short. The results were announced in Netflix’s first quarter of 2021. The share fell by about 10 percent after the results after ten hours, which surprised investors.
Netflix spends most of its quarterly letter to shareholders explaining why it thinks there has been such a dramatic slowdown in growth. The root of the problem – no surprise here – is the pandemic, says Netflix. The pandemic accelerated subscriptions this year last year when everyone was stuck at home looking for things to look at. The pandemic also slowed down the production of programs and movies, leading to what Netflix described in the first half of 2021 as a lighter content ladder.
If you put the two together, you have the unfavorable comparison that you will place a slower term versus a blockbuster term, which will never look good.
The sluggish growth is expected to continue next quarter, with Netflix predicting just 1 million additional subscribers. Last year, it added 10 million in the second quarter.
Things should turn around later in the year, Netflix says. A “very strong back half leads” – including the return of The Witcher and debut films with some big stars (The Rock, Leonardo DiCaprio) – should help bring more people to the service.
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Netflix has a bit of a catch to do if it wants to grow at the same pace as in recent years. A chart featuring Netflix, with its earnings (included above), shows that the company is significantly behind with its normal pace – to get additional subscribers in 2017 through 2019.
Not only is Netflix facing restrictions from the pandemic, but the company is also facing greater competition. HBO Max and Disney Plus regularly publish great titles. Netflix said its term started strong, thanks to Bridgerton, Lupine, en Cobra Kai, but it apparently did not have enough hits to wait to keep up with previous growth.