Netflix's highly watched subscriber growth dramatically slowed in the first three months of this year due to pandemic production delays, resulting in less new content. The company did little finger-pointing at new streaming competitors.
Netflix added 3.98 million global pay subscribers, missing its subscriber guidance by 30% to 40%. Analysts were expecting 6.4 million. Total global subscribers now stand at 208 million, up 14% from the first quarter 2020.
“We believe paid membership growth slowed, due to the big COVID-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to COVID-19 production delays,” the company said in a note to shareholders.
And there’s apparently lower data to come -- at least in the second quarter. Netflix believes it will add only 1 million subscribers in the second quarter. Analysts have been estimating a 4 million sub gain.
Still, second-half 2021 should see a rebound. “We anticipate paid membership growth will re-acclerate in the second half of 2021 as we ramp up a very strong back half slate,” said Netflix.
After-market trading of Netflix stock was down 10% to $494 a share.
Going forward, Netflix projects to spend $17 billion on all programming content. In its letter to shareholders, it says it will look to expand programming to include more local stories from different territories.
While not pointing to competitors as a direct results of under-performance, it still talked about growing premium streaming services.
“We believe we are less than 10% of TV screen time in the U.S. and even smaller in other regions when including mobile devices. More and more new streaming services are launching, reinforcing our vision that linear TV will slowly give way to streaming entertainment.’’
It adds while focusing on subscribers is important, it believes engagement and revenue are “key indicators of success. They drive the flywheel of investment in even more amazing stories for our members and future growth.”
Netflix grew revenue by 24% in the period to $7.2 billion; Net income was up 141% to $1.7 billion. Netflix says average revenue per membership was up 6% year-over-year.