Netflix blames pandemic as it misses growth forecasts
Netflix missed its growth forecasts in the last quarter, blaming a post-lockdown decline in interest in the streaming service and a Covid-related slowdown in new productions.
The company added 1.54 million new subscribers, below the 1.75 million analysts had expected and a fraction of the 10 million it added in the second quarter a year earlier, when much of the world was in lockdown.
Covid had created some “lumpiness in our membership growth (higher growth in 2020, slower growth this year), which is working its way through”, the company said in a statement.
Covid-related production delays in 2020 also meant it had fewer new offerings in the first half of 2021 but its slate of new programming “will build through the course of the year”, the company said.
The company ended the quarter with more than 209m paid memberships and last week received 129 Emmy nominations for shows including The Crown, Bridgerton and The Queen’s Gambit.
Netflix also confirmed its intention to move into gaming. “We’re excited as ever about our movies and TV series offering and we expect a long runway of increasing investment and growth across all of our existing content categories, but since we are nearly a decade into our push into original programming, we think the time is right to learn more about how our members value games,” the company said.
The shift comes as the changing viewing habits of people coming out of lockdown and intense competition pose a threat to its dominance in streaming.
Analysts are warning that Netflix’s lead is slipping as audiences shift toward rivals including Amazon Prime Video, HBO Max and Walt Disney Company’s Disney+.
According to research from Parrot Analytics Netflix’s share of global demand – a measure of the popularity of its shows – fell below 50% for the first time in the second quarter of the year.
Netflix’s “lack of new hit original programming and the increased competition from other streamers is going to ultimately have a negative impact on subscriber growth and retention”, Parrot said in a news release.
The company’s share price dipped 1% after the news.