Netflix Reveals That It Lost 130,000 Subscribers Last Quarter

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Streaming giant Netflix has long seemed unassailable. Since its meteoric rise it’s come to dominate the world of television and movies, producing multiple original series and financing all kinds of interesting films. It’s generally been considered the ‘default’ streaming service. Meaning that even if a person subscribes to two or three, one of them will certainly be Netflix.

But now, as revealed in a letter to shareholders, there’s a chance that the Netflix wave may have finally broken. During Q2 this year, 130,000 domestic subscribers terminated their accounts. Of course, once the news was revealed, the company’s stock took a hit.

On top of that, their international growth failed to meet expectations. This news isn’t quite as dramatic – Netflix still gained 2.7 million subscribers in Q2 2019 – but it’s a marked drop on previous increases, with the company generally adding about 5 million subscribers in prior quarters.

Netflix’s explanation for this was that they had a “weaker content slate” in Q2, which concluded just before the release of Stranger Things season 3. Here’s the reasoning in their own words:

“Our missed forecast was across all regions, but slightly more so in regions with price increases. We believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions (while our over-forecast was in every region).

Rather, we think Q2’s content slate drove less growth in paid net adds than we anticipated. Additionally, Q1 was so large for us (9.6m net adds), there may have been more pull-forward effect than we realized. In prior quarters with over-forecasts, we’ve found that the underlying long-term growth was not affected and staying focused on the fundamentals of our business served us well.”

Well, that may well be the case, but this news doesn’t look great. While the company is still cash-rich and a huge player in the entertainment sector, it’s facing increasingly stiff competition from competitors like Amazon Prime, HBO GO and Hulu (and maybe even some from younger viewers preferring to stick to Twitch and YouTube).

Then there’s the impending arrival of Disney Plus. The House of Mouse is clearly gunning for Netflix subscribers, betting big on new TV spinoffs of Marvel and Star Wars and their gargantuan back catalogue. It looks like the competition is finally starting to hot up in the streaming market. Let’s just hope the consumers benefit by seeing some good deals.

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