After a record-breaking year in 2020, Netflix failed to reach its Q1 2021 subscriber predictions.
According to Variety, the streamer added 3.98 million subscribers across the globe, falling short of its 6 million guidance. In contrast, Netflix added 8.5 million subscribers in Q4 of 2020 and 15.8 million in Q1 of 2020. In total, Netflix has 207.4 million subscribers.
Netflix also predicted even smaller growth for Q2 of 2021, estimating that just 1 million new members will join the service and zero growth in the U.S./Canada and Latin America regions. This led to shares of the company to fall more than 10 percent in after-hours trading.
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Netflix attributed the lower subscriber rate to a weaker programming slate than usual and the return to normalcy thanks to the COVID-19 vaccines and better weather. “We believe paid membership growth slowed due to the big COVID-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to COVID-19 production delays,” the streaming service said in a letter to shareholders. Netflix noted the upcoming returns of popular series The Witcher, Sex Education, Money Heist and You as drivers for its 2021 second-half slate. Stranger Things Season 4 was not mentioned on the list of programs in the letter.
Some analysts are also predicting that Netflix has reached a cap on its U.S./Canada subscriptions and will need to institute polices that eliminate password sharing and force customers to sign up for their own accounts. Netflix is currently testing such a feature, with some users encountering a message saying, “If you don’t live with the owner of this account, you need your own account to keep watching.” It was not all bad news for Netflix, though. Churn levels for Q1 2021 were below the year-earlier period, and the company reported revenue of $7.16 billion, a quarterly record.
This slow in growth is not stoping Netflix from spending. The streamer plans to devote $17 billion to content for the upcoming year. That is a large increase from its 2020 budget ($11.8 billion), which was lower than expected due to the COVID-19 pandemic, and its 2019 spending ($13.9 billion).
The news comes as Netflix continues to adapt to a new age of streaming. Once the leader in a business that included just a few other services (Amazon Prime Video, Hulu), the streamer now must compete with legacy media companies and their own streaming platforms, such as Disney+ (Disney), HBO Max (WarnerMedia), Peacock (NBCUniversal) and Paramount+ (ViacomCBS). Many of these studios plan to remove content from Netflix to build up their own platforms. Just recently, it was revealed that Netflix could lose the rights to stream Illumination Entertainment’s films, which include the Despicable Me franchise.
Source: Variety
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