Could the streaming giant Netflix be headed toward a decline? The financial numbers from the company’s second quarter indicate that there might be some tough times ahead.
“Netflix reported earnings on Wednesday night, and the results were disastrous,” reports The Verge. “The company saw its first major loss in US subscribers last quarter, and a mere 2.7 million paid customers added globally, nearly half of what was forecast.”
Following the report, stocks dropped by more than 10%, with a loss of 126,000 subscribers domestically — debunking expert predictions that it would gain at least 352,000 subscribers. According to CNBC, Netflix blames its content slate and regional price increases.
Speaking with investors on Wednesday, Netflix CEO Reed Hastings assured them that the company saw significant subscriber growth internationally. “There are about 700 million households that pay for TV outside of China — the equivalent of the US hundred million — and that’s one established market,” he said. “Do we have enough content in each of those countries? The internet is capable of some very large customer bases.”
CNBC notes, however, that Netflix still underperformed this quarter internationally, leading many investors to worry about the company’s future. “While Netflix’s subscriber loss in the U.S. is rare, its miss on international subscribers may be more troubling to investors since this represents its biggest growth opportunity,” reports the outlet. “Netflix reported international net additions of 2.8 million subscribers compared with analyst estimates of 4.8 million.”
One factor contributing to the domestic subscriber decline could be the company alienating certain swaths of the U.S. population, such as when the company announced it would boycott Georgia in response to the fetal heartbeat law.
“We have many women working on productions in Georgia, whose rights, along with millions of others, will be severely restricted by this law,” Netflix Chief Content Officer Ted Sarandos said. “Given the legislation has not yet been implemented, we’ll continue to film there, while also supporting partners and artists who choose not to. Should it ever come into effect, we’d rethink our entire investment in Georgia.”
The dismal performance this quarter directly follows an investor predicting back in May that Netflix’s days were numbered due to the arrival of new streaming platforms, like Disney+, that would strip it of beloved content.
“It’s going to charge $6.99/month — around $6 cheaper than Netflix. And it’s pulling all its content off of Netflix,” personal investor Stephen McBride told Forbes. “This is a big deal.”
“Picture this … Disney puts a blockbuster like Avengers Endgame on its platform the same day it opens in theaters,” he continued. “After a few weeks it’s no longer in theaters. You can’t buy it. You can’t rent it. The only way to watch is to subscribe to Disney’s steaming service, Disney+. For example, the only place your children or grandchildren will be able to see Toy Story 4 and Frozen 2 may be on Disney+. Can you imagine how many parents will sign up for this? I’ll certainly be subscribing for my daughter. At $6.99/month, what family with kids under 12 years wouldn’t subscribe?”