The second quarter results proved grim reading for the streaming giant, which has been increasing prices over the past six months including hikes of up to 18% in the US.
However that appears to have impacted numbers, with Netflix’s estimate that it would add 5 million new subscribers between April and June falling well short. In fact, the streamer only secured 2.7 million new subscribers around the world.
The numbers were even worse in its maturest market, the US, where Netflix lost 130,000 customers – its first decline since 2011 when the company split its streaming offering and its DVD mail-out service.
The lacklustre results come as Netflix readies itself to face a barrage of competition in the SVoD space, with companies including Apple, Disney and WarnerMedia all preparing to launch their own offerings into the market.
Netflix CEO Reed Hastings, however, played down the impact of forthcoming competition and said in a letter to shareholders that the “missed forecast was across all regions, but slightly more so in regions with price increases.”
“We don’t 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.”
Nevertheless, investors bailed out, causing shares to plunge up to 12% overnight, although they have slightly recovered since.
The imminent entry of companies such as Disney and WarnerMedia is also directly impacting what Netflix can offer on screen, with numerous shows – including hugely popular series such as Friends and the US version of The Office – being pulled form the streamer.
Friends, produced by WarnerBros, is set to become available on AT&T-backed sibling WarnerMedia’s soon-to-launch service HBO Max, while The Office will be offered via NBCUniversal’s online offering.
Hastings attempted to reassure investors however, adding that the return off shows such as Stranger Things, La Casa De Papel (Money Heist), Orange Is The New Black and The Crown would reinvigorate subs numbers.
“Much of our domestic, and eventually global, Disney catalogue, as well as Friends, The Office, and some other licensed content will wind down over the coming years, freeing up budget for more original content,” he wrote.
“From what we’ve seen in the past when we drop strong catalog content (Starz and Epix with Sony, Disney, and Paramount films, or second run series from Fox, for example) our members shift over to enjoying our other great content.”
Netflix is aiming to secure 800,000 US customers in the third quarter, and around 7 million globally. Its latest quarterly’s show net income had fallen to $270m ending 30 June, down from $384m a year earlier. Total revenue was up to $4.92 billion from $3.91 billion.