Netflix’s share plummets, subscriber growth slows

Highlights

• Netflix added at least 8.3 million subscribers globally from October-December in 2021.
  
  
• Despite unveiling new TV series, including the highly anticipated “Emily in Paris” and original movies, its subscription growth rate had been poor in Q4.
• Netflix earned around US$US607 million or US$US1.33 per share in the fourth quarter, up 12% YoY.

One of the world’s largest OTT platforms, Netflix reported a disappointing subscription growth in the fourth quarter of fiscal 2021.    

The streaming giant’s stock plummeted by 24%, from US$508.25 to US$385.30 per share. The share value of other OTT platforms like Disney and Roku also dipped more than 4%.

So, why has Netflix witnessed a slowdown in its subscriber growth? How does it plan to deal with the setback? Let us have a look.

Netflix’s subscriber growth

Netflix added at least 8.3 million subscribers globally from October to December in 2021. It was around 200,000 less than what the management had foreseen.

Despite unveiling new TV series, including the highly anticipated “Emily in Paris” and “You”, and original movies like multi-starrer “Don’t look up” and “Red Notice”, the company’s subscription growth had been poor during the fourth quarter.

In addition, Netflix had anticipated adding at least 2.5 million new subscribers in the first quarter of 2022, far lower than FactSet Research’s projection of four million subscribers and StreetAccount’s estimates of at least 6.93 million subscribers during the period.

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Source: Pixabay

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Reasons for slow growth

Netflix has cited the late arrival of shows like the second season of the super-hit period drama “Bridgerton”, and the highly anticipated film “The Adam Project” for slow subscriber growth.

Netflix plans to increase its subscription rates to offset the declining numbers as customers grow accustomed to its exclusive content. It has also increased its focus on the gaming segment. Netflix has been periodically releasing popular games for subscribers.

It hopes to gain critical customer insights from these releases, such as the most liked characters or what kind of plots they prefer, etc., to help shape its content.

Conclusion

Netflix earned around US$US607 million or US$US1.33 per share in the fourth quarter, up 12% YoY. It shows that despite strong financial results, its low subscription growth has been a cause of worry.