Air hole for Netflix. The streaming leader ended 2021 with global successes like Squid Game Where Money Heist, but the audience records do not hide the slowing growth of new subscribers, which worries investors. The sanction was immediate on Wall Street: the action of the Californian group lost up to 20% during electronic trading after the close of trading.
The streaming platform now has 221.8 million subscribers, slightly less than the 222 million it expected, according to its Q4 earnings release released Thursday. Above all, it only forecasts 2.5 million new subscribers for the current quarter, compared to the 4 million gained from January to March 2021. You have to go back to 2010 to find such a low figure for a first quarter, when Netflix only had 13.9 million subscribers.
Covid and the streaming war
“(Subscriber) retention and audiences remain strong but new subscriber growth has not returned to pre-pandemic levels,” admits the industry-pioneering service, which largely benefited from health restrictions in 2020 and early 2021. “We believe this is due to various factors including the Covid which continues to weigh on the economy and macro-economic difficulties in different parts of the world including Latin America”.
“There’s nothing wrong with Netflix, they’re just facing increasingly aggressive competition. It therefore becomes more difficult for them to stand out and attract the public,” reacts independent analyst Robert Enderle.
From October to December, the group made $7.7 billion in revenue, $607 million in net profit and accumulated 8.28 million new subscribers, a performance in line with market expectations.
The platform benefited from the global success of the South Korean series Squid Game, which had been seen by more than 142 million subscribers by mid-October, a month after its release, or some two-thirds of users. A record. The leaders of the group have also confirmed that there will be a second season, without giving a date. The end of 2021 was also marked by the new and final season of the Spanish series Money Heist. For 2022, on the other hand, it will be necessary to wait until March for large-scale releases like season 2 of Bridgerton, the second most popular on the service.
Increase in subscription prices
The group announced last Friday increases between one and two dollars of its monthly subscriptions in the United States. The base option now costs $9.99, and the most expensive goes to $19.99.
Also, “with relatively high inflation right now, people are trying to reduce some recurring costs,” notes Robert Enderle. Production costs also rise, and do not always pay off. cowboy bebop, a highly anticipated series released in November but canceled after just one season, “was a very expensive failure,” he adds.
However, the platform cannot afford to invest less, while it is measured on a daily basis with major competitors, from Disney + to HBO Max. It garnered nearly 50% of revenue collected by video streaming platforms in 2018, but by 2023, eMarketer predicts its share will have fallen to 28%.