Netflix Subscriber Growth Slows as Economies Reopen -- Update
April 20 2021 - 5:47PM
Dow Jones News
By Joe Flint and Micah Maidenberg
Netflix Inc. said subscriber growth for the first quarter was
weaker than expected, a potential warning sign for the company as
consumers in many countries start to emerge from pandemic-related
lockdowns and as streaming competition increases.
The company on Tuesday said it added another four million
subscribers on a net basis globally between January and March,
fewer than its forecast of six million.
Shares fell 11% in after-hours trading. The stock is up nearly
26% over the last 12 months.
The gain in the first quarter was also far below the 15.8
million subscribers it added in the year-earlier period, when the
spread of the coronavirus was first intensifying and people were
homebound and bingeing on content.
"There's a boost in engagement that you get when people are in a
lockdown situation," Netflix operations chief Gregory Peters said
at an investor event last month.
Netflix said in a letter to shareholders it believed subscriber
"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."
Increased competition from Walt Disney Co.'s Disney+, AT&T
Inc.'s HBO Max and other streaming services didn't play a part in
the company missing its estimates, Netflix said.
"We don't believe competitive intensity materially changed in
the quarter or was a material factor," Netflix told shareholders.
Retention of existing subscribers was in line with expectations,
the company said.
Netflix said it expects subscriber growth to pick up in the
second half of the year, when some of its more successful shows
return with fresh episodes, including "The Witcher" and "You."
Netflix projected it will spend more than $17 billion on content
this year.
In recent weeks, Netflix has also made moves to shore up its
content through acquisitions and licensing deals. It struck a
five-year deal valued at well over $1 billion with Sony Pictures
Entertainment for streaming rights to the studio's theatrical
releases starting in 2022. It also spent $440 million for the
rights to make two sequels to the film "Knives Out" starring Daniel
Craig.
The company reported a quarterly profit of $1.71 billion, or
$3.75 a share, compared with $542.2 million, or $1.19 a share, for
the year-earlier period. Revenue rose to $7.16 billion from $6.64
billion.
Netflix had forecast $1.36 billion in net income and $7.13
billion in revenue for the period.
For the first quarter, subscribers in markets overseas continued
to drive growth. Netflix reported gaining 1.8 million new
subscribers in the region that includes Europe and the Middle East
and 1.4 million across Asia. Subscriptions in Latin America
increased by 360,00 and in the U.S. and Canada by 450,000.
The company ended March with almost 208 million subscribers
world-wide. It said it expected to add another one million new
subscribers in the second quarter, compared with more than 10
million for the year-earlier quarter.
Many consumers who get vaccinated are venturing out of their
homes more and shifting spending despite the lingering threat posed
by coronavirus. Airlines are looking for a resurgence in summer
travel. Movie theaters and other venues have reopened in New York,
Los Angeles and elsewhere. Restaurants and hotels, both hard hit by
pandemic-related closures and restrictions, have stepped up
hiring.
Netflix made a number of changes last year amid the surge in new
subscribers. The company said in July that it promoted Ted Sarandos
to co-chief executive, a position he holds along with Reed
Hastings. In October, Netflix boosted the monthly price of its most
popular streaming plan by $1 to $13.99 a month, and its premium
offering by $2 to $17.99 a month.
Last month, the company also began experimenting with greater
password enforcement to prevent users from sharing their
accounts.
Creatively, Netflix has been on a roll. Its movies received 36
Oscar nominations, including two for best picture -- "Mank" and
"The Trial of the Chicago 7." The Oscars will be telecast this
Sunday.
Write to Joe Flint at joe.flint@wsj.com and Micah Maidenberg at
micah.maidenberg@wsj.com
(END) Dow Jones Newswires
April 20, 2021 17:32 ET (21:32 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Netflix (NASDAQ:NFLX)
Historical Stock Chart
From Mar 2024 to Apr 2024
Netflix (NASDAQ:NFLX)
Historical Stock Chart
From Apr 2023 to Apr 2024