Netflix subscriber growth screeches to crawl, slowing more than expected

Enola Holmes was considered one of Netflix’s hottest titles within the final quarter. 


Netflix‘s added 2.2 million subscribers within the final quarter, a slowdown after beginning the yr with eye-popping progress within the coronavirus pandemic that the corporate initially predicted would not final. 

Netflix, the world’s dominant streaming-video subscription service, mentioned subscribers rose by 2.2 million to 195.15 million between July and September, in keeping with its Tuesday report for third-quarter outcomes. 

That falls in need of Netflix‘s July steering so as to add 2.5 million new members. And analysts had been anticipating a beat, with a median estimate of three.Four million member additions, in keeping with Thomson Reuters. 

Netlfix shares have been down 4.eight p.c at $25.42 after hours.

Netflix began the yr by including extra prospects in a single quarter than it ever had earlier than, kicking off report progress within the first half as COVID-19 precautions devastated swaths of the out-of-home leisure business. With film theaters are shuttered, big-budget films pushed again to subsequent yr or later, sports activities solely just lately ratcheting again up, and live shows and theater largely on hiatus, Netflix’s domination of subscription streaming put it in prime place to draw nonetheless extra members. 

However Netflix had warned twice already its progress early within the yr was possible pulling ahead new subscribers that it will have usually booked within the again half. 

Tuesday, it mentioned that quarter-to-quarter fluctuations in its membership progress aren “not that significant” within the context of a large shift to web leisure, which Netflix mentioned it imagine “remains to be early and may present us with a few years of sturdy future progress.” It additionally famous Tuesday that the pandemic continues to make projections “very unsure” however the firm is hopeful that its progress traits subsequent will easy out to one thing extra regular. 

Within the pandemic, Netflix had a pure benefit as an at-home leisure possibility, however the firm additionally benefited from the binge-it-all-at-once launch mannequin it trailblazed. Netflix sometimes wraps its tasks sooner than conventional TV studios do, because it must drop all episodes of a season at one, that means it already had extra of its gigantic manufacturing slate within the can earlier than movie and TV manufacturing largely shut down globally. In consequence, Netflix nonetheless plans a gradual cadence of recent programming by 2020 and into subsequent yr. 

Netflix mentioned Tuesday that it expects to be releasing extra titles each quarter of 2021 in comparison with the year-earlier interval. It mentioned it has restarted manufacturing on a few of its greatest titles, together with season 4 of Stranger Issues, motion movie Crimson Discover starring Dwayne Johnson, Gal Gadot and Ryan Reynolds, and the second season of The Witcher.

Looking forward to the fourth quarter, Netflix expects so as to add 6 million streaming members general. Analysts’ consensus estimate was for Netflix to foretell 6.5 million. Netflix additionally predicted $1.35 per share in earnings within the fourth quarter. On common, Wall Road analysts who monitor Netflix anticipated 96 cents.

Within the newest interval, within the US and Canada, its greatest single area, Netflix added 61,000 streaming prospects, for a complete of 67.11 million. In Europe, Center East and Africa, the service elevated members by 3.13 million to 47.36. In Latin America, it added 1.49 million to hit 29.38 million. And within the Asia Pacific area, subscribers climbed 1.54 million to 14.49 million.

Total, Netflix reported a third-quarter revenue of $790 million, or $1.74 a share, in contrast with $665.2 million, or $1.47 a share, a yr earlier. Income rose 23 p.c to $6.44 billion.

Analysts on common anticipated per-share revenue of $2.13 — in contrast with Netflix’s steering for $2.09 — and $6.383 billion in income.

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Joan E. Solsman