Home Tech Tech News Netflix’s herky-jerky subscriber growth misses target, set to screech slower in early 2022 English Headline

Tech News Netflix’s herky-jerky subscriber growth misses target, set to screech slower in early 2022 English Headline

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English Headline

Angela Lang/Englishheadline

Netflix‘s subscriber growth again came in limper than predicted in the last three months of 2021 — and the company predicts growth will slow way more than Wall Street was expecting in the first months of 2022, the latest bumps on the road for the world’s biggest subscription streaming service. 

Shares plummeted 18% to $415.01 early in after-hours trading. 

Netflix said subscribers grew by 8.28 million to 221.84 million total in the fourth quarter, according to its earnings report issued Thursday. That falls short of Netflix‘s October guidance that it would add 8.5 million new members. Analysts were expecting subscriber growth to be shy of Netflix’s forecast, with the average of estimates at 8.39 million new members, according to Refinitiv. But the actual number comes in just below even that. 

Crucially, Netflix’s guidance for the first quarter was way short of analysts’ expectations. Netflix predicted it’ll add just 2.5 million new members in the first three months of the year, compared with the 5.9 million analysts were expecting. 

Netflix was upbeat in its letter to shareholders reporting the results, repeating its refrain that “even in a world of uncertainty and increasing competition,” it is “optimistic” about its long-term growth “as streaming supplants linear entertainment around the world.”

The company said its outlook for the first quarter was tame because the flow of programming was weighted more in latter weeks of the quarter than the year before; Bridgerton’s second season, for example, will be landing in March, after its first season surged in popularity over a longer stretch of the same period a year earlier. It also said that existing members are sticking with the service and “engaged” at “healthy levels,” while acquiring new members still isn’t up to pre-COVID levels. 

“We think this may be due to several factors including the ongoing COVID overhang and macro-economic hardship in several parts of the world, like [Latin America],” the company said. 

After Netflix enjoyed surges in popularity in the initial stages of pandemic lockdown in 2020 from people stuck at home and desperate for entertainment, its growth had slowed dramatically in 2021, and the company even lost members in the US and Canada — its biggest single market — during the early summer for the first time since 2019.

Netflix has also faced a wave of competition from new rivals like Disney Plus and HBO Max, as media and tech giants have launched their own services to take on Netflix as television transitions to a future of streaming. Netflix’s rare subscriber loss in the US and Canada hinted that the new competition, which is centered in the US, may be pressuring Netflix’s membership growth there. 

But by the second half of last year, Netflix appeared to bounce back, riding a wave of interest swelling from the popularity of Squid Game, the most popular show in its history. And the last quarter of the year is traditionally boom times for Netflix, when people cozy up for extra streaming during a surfeit of holidays in many of Netflix’s markets. Netflix released its two most popular films yet during the period, the star-packed movies Red Notice and Don’t Look Up, and its second season of The Witcher is its No. 7 most watched show. 

Netflix even underscored its confidence in its growth by announcing last week that it would raise prices for all its plans in the US by at least $1 a month — and in the case of its premium option, by $2. It’s the quickest Netflix has ever hiked prices after a previous bump, and it makes Netflix’s most popular plan, the standard plan at $15.50 a month now, the most expensive service of its kind among competitors. 

In the US and Canada, Netflix added 1.19 million streaming customers, for a total of 75.22 million. In Europe, Middle East and Africa, members increased 3.54 million to 74.04 million. In Latin America, subscribers grew 973,000 to 39.96 million. And in the Asia Pacific region, membership increased by 2.58 million to 32.63 million.

Overall in the fourth quarter, Netflix reported a profit of $607.4 million, or $1.33 a share, compared with $542.2 million, or $1.19 a share, a year earlier. Revenue rose 16% to $7.709 billion.

Analysts on average expected per-share profit of 82 cents — two pennies more than Netflix’s own guidance — and $7.708 billion in revenue.

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