Netflix revenues Q1 2021: the growth in the number of subscribers is stagnating because the number of hits is low

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Netflix is ​​seeing a slowdown in the number of new subscriptions as the company releases fewer shows after a year of delayed productions. The company now has 208 million paid subscribers worldwide, up from 204 million last quarter. That’s not much to complain about, but it’s a significant slowdown compared to the rapid growth Netflix saw over the same period in 2020, when it added four times as many new subscribers.

They’re also fewer subscribers than Netflix hoped to add. The company thought it would have 210 million subscribers by the end of the first quarter, but it fell short of 2 million. The results are reported in Netflix’s revenue release in the first quarter of 2021. The stock fell about 10 percent in out-of-hours trading as a result of the results, to the surprise of investors.

Netflix spends most of its quarterly letter to shareholders explaining why it thinks growth has slowed so dramatically. The root of the problem – no surprise here – is the pandemic, Netflix says. The pandemic sped up subscriptions last year this time when everyone was at home looking for things to watch. The pandemic also slowed production of shows and movies, leading to what Netflix describes as “a lighter content slate” for the first half of 2021.

Put the two together, and you have the unfavorable comparison of a slower quarter versus a blockbuster quarter that would never look good.

The slow growth is expected to continue next quarter, with Netflix predicting just 1 million additional subscribers. Last year, 10 million was added in the second quarter.

It should change later in the year, Netflix says. A “very strong back half slate” – including the return of The Witcher and debut of movies with some big stars (The Rock, Leonardo DiCaprio) – should help bring more people to the service.

A chart from Netflix showing the weekly additions to subscribers.
Image: Netflix

Netflix has some catching up to do if it wants to keep growing at the same pace it has in recent years. In fact, a graph that Netflix includes with its earnings (embedded above) shows that the company is actually lagging significantly behind its usual pace – in 2017 to 2019 – to gain additional subscribers.

Not only is Netflix facing restrictions from the pandemic, but the company is also facing increasing competition. HBO Max and Disney Plus continue to publish major titles on a regular basis. Netflix said the quarter got off to a strong start, thanks Bridgerton, Lupine, and Cobra Kai, but it apparently wasn’t waiting for enough hits to keep up with its past growth.