Netflix Is Starting To Feel Heat Of Rivals: 1st Drop In U.S. Subscribers In 10 Years

Written by Dana Sanchez
Photo: Helge Thomas/Flickr

Streaming giant Netflix missed its second-quarter forecast by 2.3 million new viewers after scoring 5.5 million new subscribers during the same period last year. Shares of Netflix dropped more than 10 percent following the report of the rare slowdown in subscriber growth.

The Los Gatos, Calif.-based company said on Wednesday that it added 2.7 million subscribers in the second quarter. Sound like a lot, but not if you are hoping for double that.

In the crowded streaming landscape, Netflix still dominates with 151.6 million global subscriptions at the end of the quarter.

However, new players are entering the industry with alternative content that appeals to targeted niches such as fans of British TV, classic movies, horror or others, and more are coming.

Apple plans to launch its own Apple TV+ platform later this year, Digital Trends reported. Disney plans to make its vast movie archive available for $6.99 a month and WarnerMedia plans to launch HBO Max in 2020, according to New York Post.

Netflix blamed the disappointing subscriber growth on a not-so-exciting show lineup but Wall Street analysts blame the company’s decision to raise prices at a time when the competition is heating up from rival streaming services, New York Post reported.

A standard Netflix subscription went up from $10.99 to $12.99 a month.

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Netflix Chairman and CEO Reed Hastings insisted the competition is not a concern. He said the company’s first-quarter subscriber growth was “so large,” with 9.6 million subscriber additions, that it may have contributed to the second-quarter slowdown.

Netflix accounts for 10 percent of total customers’ total TV time, according to Deadline. The company said it is in a good position. Its competitors have their work cut out for them, according to the Netflix quarterly letter to shareholders:

“Over the next 12 months, Disney, Apple, WarnerMedia, NBCU and others are joining Hulu, Amazon, BBC, Hotstar, YouTube, Netflix, and many others in offering streaming entertainment,” the letter noted. “The competition for winning consumers’ relaxation time is fierce for all companies and great for consumers. The innovation of streaming services is also drawing consumers to shift more and more from linear television to streaming entertainment.”

Netflix rejected the idea that it might consider advertising to boost revenue.

“We, like HBO, are advertising free,” the company said. “That remains a deep part of our brand proposition; when you read speculation that we are moving into selling advertising, be confident that this is false. We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction.”