Covid-era boom appears on the wane for Netflix

Netflix delivered its latest quarter of disappointing subscriber growth during the final three months of last year, a trend management foresees continuing into the new year.

The California-based company added 8.3 million worldwide subscribers during the October-December period, about 200,000 fewer than forecast. Besides releasing its fourth-quarter results yesterday, Netflix also projected an increase of 2.5 million subscribers during the first three months of this year, well below analysts’ expectations for a gain of 4 million.

The disappointing news caused Netflix’s stock price to plunge about 19 per cent in extended trading.

It capped a challenging year for Netflix after it revelled in eye-popping gains during the pandemic lockdowns of 2020.

It picked up 18.2 million worldwide subscribers during 2021, its slowest pace of annual growth in five years. It came after Netflix gained more than 36 million subscribers during 2020. The service is dominant, boasting nearly 222 million worldwide subscribers.

But other services backed by deeppocketed rivals such as Walt Disney Co and Apple have been making inroads in recent years and a bevy of other networks also are wading into video streaming.

While acknowledging the competition was having a “marginal” effects on its growth in its quarterly shareholder letter, Netflix emphasised its service was still thriving in every country it’s available.

The company also is faring well financially, even as its subscriber growth tapers off. Netflix earned $US607 million, ($900m) or US$1.33 a share, in the fourth quarter, a 12 per cent increase from the same time in the prior year. Fourth-quarter revenue rose by 16 per cent to US$7.7 billion.

Investors, though, are getting more worried that Netflix may be nearing its peak in popularity. Those concerns have caused Netflix’s stock price to plummet by more than 30 per cent from its peak of roughly $700 reached in mid-November.