Netflix Subscriber Growth Slows Amid Heightened Competition
By Micah Maidenberg and Joe Flint
Netflix Inc. said subscriber growth slowed in the third quarter,
highlighting the fresh challenges the company faces from
competitors ramping up their own streaming services as the
coronavirus pandemic continues to disrupt the entertainment
Netflix on Tuesday reported that it added 2.2 million
subscribers in the quarter on a net basis, short of its forecast in
July of 2.5 million new subscriptions for the period. The most
recent gain is smaller than those Netflix reported for the first
and second quarters, when it added 15.8 million and 10.1 million
The streaming giant's ability to reel in subscribers during the
first half of the year marked it as one of the companies that
benefited from the pandemic. Consumers moved to purchase Netflix
subscriptions as Covid-19 initially spread and officials locked
down economies, resulting in millions of people spending more time
at home. The suspension of professional sports leagues,
cancellation of events like concerts and closure of movie theaters
earlier this year reduced competition.
Executives at the Los Gatos, Calif.-based company previously
warned that growth had been pulled forward amid the pandemic and
said they expected subscription increases to lessen during the
second half of 2020. Meanwhile, sports have resumed, more people
have been traveling and cinemas have reopened.
"As we expected, growth has slowed," the company said in a
letter to shareholders.
Netflix shares fell 5.4% in after-hours trading.
The company faces heightened competition from other media
companies that have also started streaming television shows, movies
and other content. Earlier this month, Walt Disney Co. said it
would reorganize operations to focus on streaming initiatives,
which include Disney+. AT&T Inc.'s WarnerMedia is in the midst
of a similar restructuring to focus on the new HBO Max streaming
platform and Comcast Corp.'s NBCUniversal is realigning its
entertainment operations to give priority to its new Peacock
Netflix is in the midst of setting up a new leadership team on
its television content side. Cindy Holland, the original
programming executive who played a key role in developing many of
the streamer's most successful shows including "Orange is the New
Black" and "Stranger Things," left last month after Bela Bajaria,
who oversaw international and unscripted programming was promoted
to head of global television.
Similar to previous quarters, Netflix reported stronger gains in
many markets overseas than in the U.S. and Canada. For the latest
quarter, it said it added one million subscribers in Asia, 760,000
in the region including Europe and the Middle East and 260,000 in
In North America, the company gained 180,00 additional
subscribers for the third quarter, down compared with the gain of
more than 2.9 million in the second quarter.
Netflix ended the quarter with more than 195 million
The company reported revenue of $6.44 billion, up from $5.25
billion a year earlier. Analysts expected Netflix to generate $6.39
billion in revenue for the latest quarter.
Profit rose to $790 million, or $1.74 a share, from $665
million, or $1.47 a share, the year earlier. Analysts had expected
$2.13 a share, according to FactSet.
Write to Micah Maidenberg at firstname.lastname@example.org and Joe
Flint at email@example.com
(END) Dow Jones Newswires
October 20, 2020 16:42 ET (20:42 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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