Netflix is down nearly half a million subscribers in North America this quarter, leading to a stock drop of nearly 5% on Wednesday — the company’s biggest slide since its last poor earnings report in April.
This marks the first time the platform has lost domestic customers in two years.
The Financial Times, which ran the headline, “Netflix bleeds subscribers,” says the streaming platform’s failure to meet analyst projections has investors jumpy.
“The California-based company predicted it would add 3.5 [million] subscribers in the third quarter, disappointing investors who were looking for a stronger rebound in the second half of the year,” the outlet reported, adding, “Analysts had forecast that Netflix would add 5.9 [million] subscribers during the third quarter.”
In a shareholder letter, Netflix executives blamed their failure to meet projections this quarter on “unusual choppiness in our growth” and cited the pandemic, something CFO Spencer Neumann echoed on an earnings call. But CEO Reed Hastings had to assuage similar worries after disappointing numbers the previous quarter in April. At that time, too, the company claimed COVID was hurting business, with Hastings saying, “We had those 10 years that were smooth as silk, and we are just a little bit wobbly right now.”
Some people aren’t buying the coronavirus line, however, and blame other factors for Netflix’s poor performance.
Conservative radio host and commentator Todd Starnes believes pushing a woke agenda and filling original series and movies with hard-R-rated material could also be driving viewers away.
“They’ve gone woke,” said Starnes in an op-ed, pointing out the deal the company struck with Barack and Michelle Obama to create politically themed films and series, which he classified as “propaganda disguised as entertainment.”
The former Fox News host also referenced the scandal over the movie “Cuties,” which showed preteen girls performing sexually suggestive dance moves, that hit the platform late in 2020. Starnes argued it highlighted for families that Netflix isn’t producing content they want to welcome into their homes.
“[Netflix] is basically becoming a soft porn channel,” he said, later adding, “Families are just not going to spend money on that sort of garbage. They long for the days of Everybody Loves Raymond and the Andy Griffith Show.”
In the midst of Wall Street worries, the streaming giant is looking to gaming as a future saving grace.
The company confirmed this week that it plans to move into video games during its earnings call, with Chief Operating Officer Greg Peters saying, “This is a core part of our subscription offering.”
Some tech insiders, like the analysts at Recode, are skeptical though. “Figuring out how to make games is a very different skill set than making TV shows and movies — which is why most big entertainment companies have failed whenever they’ve tried to get into games themselves,” the outlet reported. “Big tech companies like Amazon, Apple, and Google have all swung and missed to varying degrees, as well. So it’s entirely possible that Netflix’s move into games could flop, too.”