Subscriber growth in Netflix’s domestic US market took a hit for the first time in eight years, the streaming giant revealed in its Q2 report.
More than 125,000 viewers in the US cancelled their subscriptions, compared with analyst expectations that it would add almost three times that amount in the quarter. Netflix also missed its own target to add 2.3 million subscribers internationally by some margin.
A slow down in subscriptions is hardly surprising given the streaming service’s monumental quarterly growth. Netflix still counts more than 60 million Americans among its paying subscribers, and with a drop from 60.23m in Q1 to 60.1m in the second quarter, it’s hardly an exodus.
But this is the first major hit the company has witnessed since it pivoted from its former business model of shipping DVDs out to viewers’ homes to streaming shows on demand. Wall Street responded with a more than 10 per cent drop in Netflix stocks.
Despite the shaky quarter, Netflix CEO Reed Hastings was quick to point to the headway it is making in international markets, particularly China and India – two markets where streamers have barely scratched the surface in terms of penetration. Five forthcoming Netflix Original series targeted at India will spearhead a concerted effort to grow subscribers in the territory in coming months, though the process will be a slow and steady affair, according to Chief Content Officer Ted Sarandos.
“We’ve been seeing nice, steady increases and engagement with our Indian viewers that we think we can keep building on,” he said. “Growth in that country is a marathon. We’re in it for the long haul.”
Netflix’s other major hurdle is the coming wave of new streaming services from the likes of Disney, WarnerMedia, NBC Universal and Apple. By this time next year, all will have launched in the US, posing a direct threat to Netflix’s near decade-long stranglehold on the streaming market for the first time.
As other media giants get serious about streaming, they have also called back their biggest shows, crippling some of the biggest winners in Netflix’s library. Exclusive Netflix Originals may be a big draw for some viewers, but shows like Friends and The Office– owned and recalled by Warner and NBC respectively – that made subscription renewals a no-brainer for many, similar to TV’s syndication model.
Top image: Stranger Things season 3 was a recent success for Netflix