Netflix is feeling the effects of the pandemic as subs slow

With almost everybody in the world asked to remain at home for the majority of 2020, people began to subscribe to Netflix and Reed Hastings looked at this, and it was good.

But the pandemic and lockdown also meant that Netflix wasn’t able to produce new content as quickly as it has previously, and that’s not good looking at the firm’s Q1 2021 financial results.

Now, when we say “not good”, things aren’t terrible at Netflix. The firm still managed to bring in $7.163 billion during the quarter. However, Netflix does point to its successes in 2020 as the reason it’s first quarter has been decent.

“The extraordinary events of Covid-19 led to unprecedented membership growth in 2020, as it pulled forward growth from 2021, and delayed production across every region. In turn, we ended 2020 with a bigger membership and revenue base than we would otherwise have had, contributing to record Q1’21 revenues,” the firm told shareholders.

The trouble is that moving into 2021 Netflix lacks a carrot to bring subscribers to the platform in the droves we saw during 2020. For Q1 2021, Netflix expected to add six million new subscribers to the platform but in reality it only added four million subscribers.

Netflix also doesn’t believe that competitors are out performing it and that they are in the same boat.

“We don’t believe competitive intensity materially changed in the quarter or was a material factor in the variance as the over-forecast was across all of our regions,” Netflix added.

Looking at Disney+ however, the service is gearing up to boast between 230 and 260 million subscribers by 2024. Netflix by comparison has 207 million subscribers right now but growth this last quarter was incredibly slow. In fact, despite Netflix’s great year in 2020, growth was rather flat expect in Q2 2020 when the firm added just under 10 million new subscribers.

As we now know, that growth spurt was an anomaly.

While Netflix says that subscriber numbers aren’t the full measure of growth, investors disagree.

The BBC reports that after this news, Netflix shares fell 11 percent taking $25 billion off of the company’s market cap.

The firm says that the second half of the year will likely be better and more subscribers will join Netflix as shows like The Witcher, Money Heist and You return.

Netflix is facing harsh competition these days and it’s going to have to do something more than create content to win subscribers back.


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