The video-streaming platform Netflix saw its shares fall as much as 11% in after-hours trading yesterday after reporting only 3.98 million new global subscribers last quarter, a far cry from the 6.2 million additions anticipated by Wall Street analysts. The company also said that it expects only 1 million new subscribers over the next quarter.
Netflix has blamed this slowdown in subscribers on the Coronavirus pandemic, attributing the production delays of its big-ticket movies and TV shows to COVID-19.
“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,” said Netflix in a letter to its shareholders.
Analysts believe that Netflix is facing increasing competition in the video streaming market, especially in the U.S., with Disney’s Disney+ and Hulu, AT&T’s HBO Max, Apple TV+, Amazon Prime, and Comcast NBCUniversal’s Peacock all competing for subscribers. However, the company has denied this factor in its report, saying that it doesn’t believe competition played a factor in the below-par subscriber numbers.
“We don’t believe competitive intensity materially changed in the quarter or was a material factor in the variance as the over-forecast was across all of our regions,” said Netflix.
The streaming giant expects to bounce back in the second half of 2021, with content delayed due to Covid-19 delays slated to return.
“As we’ve noted previously, the production delays from Covid-19 in 2020 will lead to a 2021 slate that is more heavily second-half weighted with a large number of returning franchises,” the company added.
The company said that production has resumed and running in nearly all of its major markets. Netflix said that it expects to spend more than $17 billion in cash on content this year.