Netflix (opens in new tab) has released its Q1 2021 earnings report and it seems the company is seeing a slight slowdown in new subscriptions. The reasoning behind it? A substantial boost due to the height of the COVID-19 pandemic in 2020 and a delay in new productions is Netflix's thinking.
During the Q1 2021 earnings report, Netflix announced that it missed its subscribers target by 2 million. It hoped to reach 210 million subscribers by the end of the first quarter but instead managed 208 million. That might still sound impressive to you or I but it led to a fall of around 10% in Netflix's share price in after-hours trading because of the unexpected failing. That works out as a massive $25 billion off the company's market capitalization.
To break it down further, about 3.98 million people signed up for Netflix between January and March despite the company projecting that figure to be 6 million. In the past year, it has added 15.8 million new subscribers with much of that growth coming from Asia where Netflix added 9.3 million new subscribers in 2020, working out as an increase of about 65% over the previous year.
So, it's not all bad for one of the best TV streaming services (opens in new tab) out there, but Netflix does have a pivotal issue. Thanks to the pandemic that helped boost its subscriber numbers substantially, it's also had to slow down massively when it comes to new productions. Like with all TV and movie production, Netflix has had to delay many of its new shows and movies which has led to it admitting there'll be a 'lighter content slate' for the first half of 2021. New subscribers want new content and it's now facing stiff competition from the likes of Disney Plus (opens in new tab) which has continued to offer new shows such as Wandavision and The Falcon and the Winter Soldier.
Essentially, things should balance out for Netflix. It saw inflated increased subscriptions thanks to much of the world being stuck at home, but many of those subscribers are likely to stick around providing Netflix can offer up some new content later in the year. The return of The Witcher in the second half of the year as well as new films including big stars such as The Rock and Leonardo DiCaprio should help here, and the company is still reporting strong revenues of $7.16 billion. Like with many firms, there's likely to be a few wobbles while things balance out in the aftermath of the COVID-19 pandemic.