Increased competition and a lack of film and series hits are causing problems for the streaming market leader Netflix. In the most recent quarter, significantly fewer new customers were added than expected.
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After the corona-related subscription boom in the first half of the year, the number of customers for the online video service Netflix has decreased significantly. The bottom line was that only 2.2 million paid subscriptions were added in the third quarter, as the company announced on Wednesday night.
Netflix missed its own forecast and remained far below the analysts’ expectations. The increasing competition in the streaming business is troubling the market leader. The share fell by six percent at times after the trading hours, but the price had already risen by 62 percent since the beginning of the year.
While series hits like “Tiger King” in combination with the increased streaming demand in the corona pandemic had caused a huge rush in the two previous quarters with 15.8 million and 10.1 million new users respectively, growth has now slowed down sharply. Although Netflix claims to have been able to score with productions such as the action thriller “The Old Guard” with Oscar winner Charlize Theron or “Project Power” with Jamie Foxx, overall the blockbusters were limited.
Enough new series and films in the pipeline
Compared to the same period last year, when 6.8 million customers were added, things looked much more modest in the past quarter. The profit increased year-on-year by 19 percent to 790 million dollars (668 million euros), but also remained below the expectations of Wall Street.
Meanwhile, sales rose by around 23 percent to 6.4 billion dollars and exceeded forecasts somewhat. For the current quarter, Netflix expects 6.0 million new customers – here again, analysts had expected more.
However, co-CEO Ted Sarandos countered fears that the pandemic could permanently affect the streaming giant’s offerings. The production pipeline for 2021 is almost intact, he assured.
More providers in the streaming market
“The productions could go a little slower than we planned, but essentially we’re back in business,” Sarandos said in a video interview. For example, the productions of the new seasons of series hits like “Stranger Things” or “The Witcher” could have started again.
The fact that Netflix struggled recently is likely to have been due to increased competition. In addition to established rivals such as Hulu and Amazon Prime, Hollywood giant Disney + is now also fully relying on streaming.
Only last week, the counterparty, suffering from the pandemic with its paralyzed amusement parks, announced a restructuring of the group that will make online video services such as Disney + the clear focus of business in the future. In addition, WarnerMedia’s HBO Max and Comcast’s Peacock have recently added other new streaming services that are vying for viewers with Netflix.
Youtube and Tiktok compete
The management is well aware of the increased competitive pressure. “We are thrilled to compete against Disney and a growing number of other players,” said the letter to the shareholders confidently.
But Netflix wants to improve its service as soon as possible to be “everyone’s first choice for online entertainment”. The competition includes not only streaming, but also other forms of entertainment such as video games or user-created content on Youtube or Tiktok.