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Netflix Subscriber Growth Slows After Pandemic Boost

This is a syndicated repost published with the permission of Statista | Infographics. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

Following a record year that saw Netflix add 36 million subscribers in 2020, the world’s most popular video streaming service saw its subscriber growth slow significantly in the first three months of 2021. According to the company’s latest earnings release, Netflix added just 4 million subscribers in the first quarter, compared to more than 15 million during the same period a year ago.

According to Netflix’s own assessment of the slowdown, the company became a victim of last year’s success, when a deluge of people signed up amid stay-at-home orders, while also suffering from pandemic-related production delays that weakened its content line-up for the first half of 2021. The latter is also the reason for Netflix’s seemingly lowball guidance of one million added subscribers in Q2 2021. With a content line-up heavily skewed towards the second half of the year, the company expects to see subscriber growth pick up towards the end of 2021, however.

While Netflix fell short of its subscriber growth target for the first quarter, the company exceeded expectations financially. Interestingly, the reasons behind this are similar to those behind its lackluster subscriber additions. Subscriber growth pulled forward to 2020 resulted in a larger revenue base in Q1 2021, while production delays reduced content costs, which boosted operating margins in return. Ending the quarter with $7.16 billion in revenue and net income of $1.71 billion, Netflix set new records on the top and bottom line, cushioning the blow from its disappointing user growth.

This chart shows Netflix’s global paid net subscriber additions.

Global paid net subscriber additions by Netflix

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