As the world’s largest and most popular streaming platform, Netflix seems like it can’t do anything wrong.
The growth of the multimedia company has been exponential over the past decade, so much so that Netflix recently announced plans to branch out into creating video games at no additional cost to its global subscriber base.
Despite the positive reception of this announcement, as well as Netflix posting $ 7.3 billion in revenue for the second quarter of 2021, all is not rosy at the headquarters of the streaming giant. Why? Because Netflix has actually lost subscribers in its main North American stronghold.
Revealed during the company’s second-quarter 2021 earnings report (according to The Hollywood Reporter and Variety), Netflix said it recorded a loss of 430,000 subscribers in the United States and Canada.
Overall, Netflix’s subscriber base grew by 1.5 million between Q1 and Q2 2021 – the streamer landed nearly a million new paying users in the Asia-Pacific region alone – and Currently leads its streaming rivals with a global subscriber base of 209 million.
However, Netflix is seeing a slowdown in the growth of its user base. In the first quarter of 2021, the company had forecast it would add 6 million new users to its subscriber base, but the actual figure of 4 million was 33% lower than estimated.
Netflix hopes to increase its user base to 3.5 million new subscribers in the third quarter of 2021, which is a more modest outlook based on its second-quarter 2021 numbers.
Analysis: Why did Streaming Platform Netflix see a drop in users in 2021?
For its part, Netflix believes there are two main reasons for its shrinking North American user base and slower overall growth.
The first reason? Covid19. Netflix has not been immune to the effects of the ongoing pandemic, like all other global companies, and subscribers have had to decide if they can continue to pay the monthly subscription fees which for a Premium subscription, can cost $ 17.99 (£ 13.99). ) per month.
Speaking on the call for the second-quarter earnings report (via THR), Netflix CFO Spencer Neumann said: “It really comes down to Covid, frankly. For us, that at least creates short-term fluctuations in business trends. ”
Netflix Co-CEO Reed Hastings added, “We’ve had these 10 years that were smooth as silk, and we’re just a little wobbly right now.”
As for the second cause, Netflix attributes the increased competition from other on-demand entertainment apps, such as TikTok and YouTube, to slower growth.
As Variety reported, a Netflix Q2 2021 earnings report letter reads: “In the race to entertain consumers around the world, we continue to compete for screen time with a wide range of screen time. companies like YouTube, Epic Games, and TikTok (to name a few). But, above all, we compete with ourselves to improve our service as quickly as possible. If we can do this, we are confident that we can maintain our strong position and continue to grow nicely as we have been over the past two – decades. ”
As valid as these two reasons are, is Netflix’s propensity to cancel fan-favorite shows another cause of the slowdown in its paying customers?
In 2021 alone, Netflix unplugged 10 TV series, including the Sherlock Holmes spin-off The Irregulars, a live-action adaptation of Mark Millar’s Jupiter’s Legacy comic book, and Jamie Foxx Dad’s sitcom Stop Embarrassing Me!
A quick social media search, for some of the shows Netflix canceled this year, shows that there was (and still is) an audience for them.
If some Netflix fans are increasingly disappointed that their favorite shows are constantly being canceled, why would they continue to support a streaming platform that does?
Of course, Netflix is a business and, given that it will have suffered the financial impact of the Covid-19 pandemic, it will have had to make budget cuts and cancel some shows.
The fact remains that the streaming giant has lost subscribers in one of its key territories – and it may not be a coincidence that some users ended their subscriptions in the same quarter that Netflix canceled. cult shows.