Netflix Subscriber Growth Slows, Shares Slump
Streaming video on demand behemoth, Netflix, has reported a slowdown in third quarter subscriber growth, adding 2.2 million versus the 2.5 million expected. The news sent shares slumping nearly 6% to US$494 in after-hours trading.
The company has forecast to snare around 6 million new subscribers worldwide in the coming period, down from around 6.51 million commentators forecast.
It comes as demand for video streaming services boom\ during the coronavirus crisis, prompt by work-from-home employees and home-bound lockdown restrictions.
Commentators speculate the company’s primary concern heading into 2021 could be the potential shortage of high-performing films and TV shows.
During the quarter, Netflix notched US$6.44 billion in revenue (up 22.7%), beating expectations.
“The state of the pandemic and its impact continues to make projections very uncertain, but as the world hopefully recovers in 2021, we would expect that our growth will revert back to levels similar to pre-COVID,” said the company in a shareholder’s letter.
“In turn, we expect paid net adds are likely to be down year over year in the first half of 2021 as compared to the big spike in paid net adds we experienced in the first half of 2020.”
The news comes as many studios struggle with the prospect of resurrecting production post the shutdown effects of the COVID19 pandemic on Hollywood.
The streaming giant is tipped to accelerate its investment in original content, in a bid to mitigate subscriber churn.
“For our 2021 slate, we continue to expect the number of Netflix originals launched on our service to be up year over year in each quarter of 2021 and we’re confident that we’ll have an exciting range of programming for our members, particularly relative to other entertainment service options,” adds the company.
It comes after Netflix raised the prices of its streaming subscription in many international places, coupled with growing competition from the likes of HBO Max, Disney+ and Amazon Prime Video.