Netflix thrived on a need for lockdown escapism but it now has to face up to the reality of a fiercer and more costly battle for eyeballs. The slowdown in subscriber growth was inevitable, not just because more of us are getting off the sofa, it’s also the natural consequence of a more crowded market where participants are spending big to win market share.
By adding 1.5 million net new subscribers during the second quarter, the streaming behemoth may have beaten its own forecast but it was one of its weakest performances in recent history. Guidance of 3.5 million audience growth for the third quarter was also about two million behind Wall Street analysts’ forecasts.
Netflix had already flashed its get out jail free card at investors in the first-quarter results, citing “unprecedented membership growth in 2020” that had pulled forward new subscriptions from 2021. Spencer Neumann, chief financial officer, told investors that it should end the year on a “kind of normalised growth trajectory” after the pandemic “choppiness”.
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