Course Breakdown: New Netflix customers are disappointed

Wednesday 21 April 2021

It collapses of course
New Netflix customer numbers disappointed

Netflix attracted millions of new users last year with a series of hit shows such as “The Queen’s Gambit” or “Tiger King”. But the times of unlimited flow seem to be over for now. Investors turn away in disappointment.

Netflix, the leader in the live streaming market, has gained far fewer users than expected at the start of the year due to a shortage of new movies and series. Netflix announced after the US market closed that the number of subscribers rose in the first quarter by 4 million to nearly 208 million. The online video service clearly missed its target of about 6 million new customers and the expectations of Wall Street analysts.

Investors reacted frustrated and at times let the stock drop more than ten percent in after-hours trading. Netflix increased its revenue and profits sharply in the three months to the end of March. The bottom line was that the company made $ 1.7 billion (1.4 billion euros), up 140 percent from last year. Sales grew 24 percent to $ 7.2 billion.

Disney is on Netflix’s neck

But after the boom at the start of the Corona crisis, which brought record Netflix results last year, the number of customers has fallen sharply. Due to production problems caused by the pandemic, there has recently been a shortage of new broadcasts. Additionally, Netflix is ​​struggling with increasing competition, for example, Hollywood giant Walt Disney is putting increasing pressure. Disney +, the live streaming service for the Mickey Mouse group that launched as a Netflix hunter in November 2019, has already crossed the 100 million mark in March. Although Netflix still has more than twice as many users, Disney is catching up fast and it’s still represented in fewer countries.

Netflix is ​​well aware of the intense competition and addresses it in detail in its Quarterly Report. For example, it is said that comparing subscriber numbers – due to discounts and other promotions – doesn’t tell the whole story. A barely convincing criticism, as Disney relies heavily on specials. On the one hand, Netflix recently raised prices in the US domestic market and other areas and examined a more stringent approach to password sharing for multiple use of accounts. Growth is unlikely to foster that.

Projections for the current quarter were meager – Netflix only expects 3.2 million new users. The main problem, which also affects competition and large parts of the entire entertainment industry, is the paralysis of film and series production due to the Corona pandemic. Netflix warned in a letter to contributors that an influx of new content can only be expected in the second half of the year.