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What’s happening at Netflix? 

  • Netflix has been riding high on the crest of a massive subscriber spike since the start of the year, with 16m joining the fold over the first quarter alone as lockdowns took hold in countries across the world.

  • Since then the streaming provider hasn’t looked back, gaining a further 10.1m subscribers over the three months from April to June.

  • That golden age may be coming to an end however, with a mere 177,000 Americans added over the third quarter – versus three million in the spring.

  • This abrupt change in pace coincides with the relaxation of stringent lockdown measures over the summer, when Americans were able to gather outdoors once more.

  • Globally Netflix drew a mere 2.2m summer subscribers, way off the 6.7m new sign-ups registered last summer.

  • Rationalising this comparatively poor performance to its investors, Netflix blamed the dip on exhausting the available pool of potential subscribers, stating: “As expected, growth has slowed. We think this is primarily due to our record first-half results.” 

 

Why it matters

  • As far as its bottom line is concerned Netflix exceeded expectations, drawing quarterly revenue $6.43bn – slightly above projections of $6.38bn – although earnings per share fell well short at just $1.74 versus an expectation of $2.14.

  • Netflix is facing increasingly vociferous competition from the likes of Disney and WarnerMedia which have begun siphoning off subscribers to their own platforms, Disney+ and HBOMax.

  • Acknowledging this rapidly shifting landscape in a letter to shareholders, Netflix described the present degree of competition for consumer attention as ‘vibrant‘.

  • Analysts are unlikely to be overly concerned by the slowdown, particularly as Netflix is closing in on 200m subscribers worldwide, with the official count standing at 193m.

  • Netflix‘s closest competitor Disney Plus languishes far behind with just 60m subscribers at the last count.