SAN FRANCISCO – Netflix shares tumbled some 10% yesterday after the leading streaming service reported cooling growth in paid subscriptions that caught fire during the Covid-19 pandemic.
While revenue jumped 24% in the first quarter of this year when compared with the same period last year, paid memberships grew less than expected to 208 million, Netflix said in its quarterly earnings release.
“We believe paid membership growth slowed due to the big Covid-19 pull forward in 2020, and a lighter content slate in the first half of this year due to Covid-19 production delays,” executives said in the release.
Netflix reported profit was up to a stunning US$1.7 billion (RM6.9 billion) on revenue of US$7.2 billion, as subscribers weathered price increases.
The Silicon Valley-based company said it expects subscriber growth to accelerate anew later this year as it releases sequels to hit shows.
Netflix executives had cautioned in past quarters that the pandemic likely fuelled a surge in subscriptions, with people who would have eventually signed up jumping on board sooner than they might have.
“We’re focusing on the fundamentals of our business, which remain healthy,” Netflix said.
“We continue to anticipate a strong second half with the return of new seasons of some of our biggest hits and an exciting film line-up.”
A shift from traditional television to streamed services such as Netflix remains a clear trend, according to the company.
However, competition is also ramping up from Amazon, Disney and other titans.
“More and more streaming services are launching, reinforcing our vision that linear TV will slowly give way to streaming entertainment,” Netflix said.
“We’re working as hard as ever to continually improve our service so that we are the best entertainment option available.”
But the sharp deceleration suggested slower growth ahead from Netflix, sending shares down 11% in after-hours trade.
The cooling is a “sign that the world is coming back to more normal at the expense of Netflix,” tweeted Gene Munster of the investment firm Loup Ventures.
“We think the long-term growth is flattish.” – AFP, April 21, 2021
