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For the first time since 2011, Netflix lost U.S. subscribers

Netflix's subscription numbers took a downward turn over its second fiscal quarter of the year. Miguel Candela/SOPA Images/LightRocket via Getty Images

On Wednesday, Netflix revealed its slowest growth period to date in a 2019 quarterly earnings report.

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In the streaming service’s second fiscal quarter, from April to June, Netflix’s overall paid memberships grew by 2.7 million, which may sound like a lot, but that figure is less than half of the 5.5 million users the company drew in this time last year.

For the first time since 2011, the worldwide streaming giant saw a loss in paid subscribers, with a decrease of around 130,000 individual accounts, as reported by the Hollywood Reporter.

As a result of the drop, shares in the company fell by 11 per cent in pre-market trading on Thursday morning.

WATCH: Netflix stocks plunge

Though there may not be one single reason for the unexpected drop, there are a number of plausible factors contributing to the subscription slump.

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A number of Netflix users credit this slow growth period to the company’s sporadic price increases, while others believe it is related to the quantity and quality of the service’s original content.

Here’s what some Netflix users had to say on Twitter:

When asked what Netflix believes was responsible for the lack of subscription growth, the company provided an official statement to Global News, saying: “Our missed forecast was across all regions but slightly more so in regions with price increases.”

Other subscribers believed the threat of competitor streaming services might have played a part in the unexpected decline.

Netflix has always had competitors, including STACKTV, Crave, HBO, Hulu, Amazon Prime and the upcoming Disney+ streaming service.

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The company, however, does not believe competition played a part in the subscription decline.

The statement continued: “We don’t believe competition was a factor since there wasn’t a material change in the competitive landscape during [the second quarter of the fiscal year], and competitive intensity and our penetration is varied across regions (while our over-forecast was in every region).”

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The streaming giant maintained that it beat its subscriber growth forecast in the last quarter and that subscription numbers are not, as reported, “steadily declining.”

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“We think [the second quarter of the fiscal year’s] content slate drove less growth in paid net adds than we anticipated,” the company wrote, referring to Netflix’s releases between April and June, which included Adam Sandler’s Murder Mystery and Ali Wong’s Always Be My Maybe.

The streaming service added that while both original feature-length films were extremely popular, for the most part, they did not prompt new users to subscribe.

Netflix logo is reflected on a woman’s eyeglasses in Ankara, Turkey on Nov. 27, 2018. Ercin Top/Anadolu Agency/Getty Images
“[The first quarter of the fiscal year] was so large for us (9.6m net adds) that there may have been more pull-forward effect than we realized,” the company noted.
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In its quarterly earnings report, Netflix’s statistics were largely focused on U.S. or worldwide data. The company told Global News it doesn’t give out specific subscriber numbers for Canada.

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In its recently started third quarter, Netflix has anticipated up to seven million subscribers as opposed to the six million achieved in 2018.

Thanks to the third season of the critically acclaimed Stranger Things, it’s possible the company will see growth again in 2019. Stranger Things was released on July 4.

Additionally, Netflix will add the third season of The Crown as well as the highly anticipated final season of Orange Is the New Black to its television roster. Both are widely popular shows.

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In its statement, Netflix concluded: “In prior quarters with over-forecasts, we’ve found that the underlying long-term growth was not affected and staying focused on the fundamentals of our business served us well.”

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As of this writing, Netflix has more than 151 million paid subscribers.

adam.wallis@globalnews.ca

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