Netflix lost 970,000 subscribers and Wall Street cheered. That’s the crux of every headline that has followed the company’s not-as-spooky-as-feared earnings report from Tuesday, one encapsulated by co-C.E.O. Reed Hastings’ pitiable “less bad” verdict. But that superficial narrative belies a more fascinating story occurring on a more granular level. Netflix lost 1.3 million subscribers during the quarter in the U.S. and Canada (UCAN). This is the second quarter in a row of substantial subscriber loss in Netflix’s most penetrated, highest revenue per user and substantial market.
For years, Netflix bulls have argued that the company’s long-term growth will come from overseas, and they tend to dismiss domestic churn as a sort of to-be-anticipated outcome while they focus on other data points. For instance, Netflix did gain more than 1 million subscribers in its Asia Pacific region this quarter, which essentially abnegated its losses in the States and Canada.
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