Netflix Inc.
NFLX -0.88%.
said subscriber growth in the first quarter was weaker than expected, a potential red flag for the company as consumers in many countries begin to recover from the pandemic, as well as increased competition.
On Tuesday, the company said it added four million new subscribers worldwide between January and March, less than its forecast of six million.
The stock was down 11% in after-hours trading. The share has increased by almost 26% in the last 12 months.
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Growth in the first quarter is also well below the 15.8 million subscribers added since the beginning of the year, when the spread of the coronavirus increased and people were chained to their homes and compulsively searching for content.
There is motivation when people are in a lockdown situation, Netflix COO.
Gregory Peters.
said at an investor event last month.
In a letter to shareholders, Netflix said it believed subscriber growth had slowed as it pressed to produce Covid-19 by 2020 and offered less content in the first half of this year due to delays in Covid-19 production.
Increased competition due to
Walt Disney Co.
OPC -2.48%.
Disney+,
AT&T Inc.
According to Netflix, HBO Max and other streaming services have not played a role for the company, so the audience has been overlooked.
We do not believe that competitive intensity changed significantly during the quarter or that it was a material factor, Netflix told its shareholders. Retention of existing subscribers was in line with expectations, the company said.
Netflix said it expects subscriber growth in the second half of the year as some of its most popular series return with new episodes, including The Witch and You. Netflix plans to spend more than $17 billion on content this year.
In recent weeks, Netflix has also taken steps to bolster its content through acquisitions and licensing deals. Sony Pictures Entertainment has signed a five-year deal worth more than $1 billion for the movie rights starting in 2022. It also spent $440 million on the film rights to two Knives Away sequels starring Daniel Craig.
The company reported quarterly earnings of $1.71 billion, or $3.75 per share, compared with $542.2 million, or $1.19 per share, in the same period a year earlier. Revenue increased from $6.64 billion to $7.16 billion.
Netflix expects net income of $1.36 billion and revenue of $7.13 billion for the period.
Subscriber growth in foreign markets continued in the first quarter. Netflix said it added 1.8 million new subscribers in a region that includes Europe and the Middle East, and 1.4 million in Asia. Subscriptions in Latin America increased by 360,000 and in the United States and Canada by 450,000.
The company ended March with nearly 208 million subscribers worldwide. The company expects to add a million new subscribers in the second quarter, up from more than 10 million in the previous quarter.
Many vaccinated consumers are increasingly leaving their homes and changing their spending habits despite the ongoing threat of the coronavirus. Airlines are hoping for a resurgence in summer travel. Theaters and other venues have reopened in New York, Los Angeles and elsewhere. Restaurants and hotels, which have been hit hard by the closures and restrictions related to the pandemic, have hired more people.
Last year, Netflix made a number of changes amid a surge in new subscribers. In July, the company said it would
Ted Sarandos.
in the position of co-chairman, which he holds jointly with
Reed Hastings.
In October, Netflix increased the monthly price of its most popular streaming service by $1, to $13.99 per month, and its premium offering by $2, to $17.99 per month.
Last month, the company also began experimenting with increased password usage to prevent users from sharing their accounts.
On the creative front, Netflix is on the rise. His films have received 36 Academy Award nominations, including two for Best Picture for Man and Trial of Chicago 7. The Oscars will be televised this Sunday.
The launch of Disney+ has brought some magic to a company that has closed theme parks and cinemas since the Corona virus. The WSJ explains how Disney’s streaming platform has become a major competitor in an already crowded field. Illustration photo: Jacob Reynolds/WSJ
E-mail Joe Flint at [email protected] and Micah Maidenberg at [email protected].
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