Netflix Fails to Meet Expected User Growth in Q2 2019

Netflix has issued its quarterly report for the April-June period and all is not well as the company failed to meet the goals for paid consumers in both the US and internationally. Due to this, its shares fell by 10% even though earnings per share and total revenue met the goals.

In a letter to investors, Netflix stated that the most substantial loss of users was in locations where the monthly price had been raised.

The detailed information shows that instead of adding 352,000 new paid subscribers in the US, it lost 126,000. One of the factors was also the lack of new content as the company didn’t offer any new shows. Netflix hopes a better third quarter with the launch of the third season of “Stranger Things” and the final season of “Orange Is the New Black”.

At the international stage, it added only 2.83 million subscribers instead of the projected 4.81 million but glancing at the yearly data, the international paid users have crossed 151 million, a 21.9% increase. It is pertinent to note that on a single membership, multiple people can watch on multiple devices, so the number of viewers can be higher.

Netflix admitted that it is set to lose two of its most-popular shows – “The Office” and “Friends” which will shift to NBC Universal’s own service and on HBO Max, a new service part of the WarnerMedia’s portfolio. However, the company said that this move could free up money for more original content.

Ted Sarandos, Chief Content Officer, said that Netflix will keep spending on original programming. He added that subscribers will know Netflix is “going to create their next favorite show” and not just “be the place where you can get anything every time”. The increasing competition in the industry was not a factor for the sub-par performance since there “wasn’t a material change in the competitive landscape during Q2.”

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