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BENGALURÚ (REUTERS) – Netflix on Tuesday (Oct. 20) posted its weakest subscriber gains in four years as streaming competition increased, pandemic restrictions eased and live sports returned to television.
The company added 2.2 million paid subscribers globally during the quarter ending Sept. 30, missing Wall Street’s goal of 3.4 million and its own forecast.
Earnings per share also fell below analyst expectations by $ 1.74. The consensus forecast was US $ 2.14, according to data from Refinitiv’s IBES.
Shares in Netflix, one of the biggest gains this year as people stayed home amid the pandemic, fell nearly 6 percent to $ 494 (Singaporean $ 670) in after-hours trading on Tuesday. .
“Domestic subscribers were pretty flat, highlighting Netflix’s saturation in the US,” said Ross Benes, an analyst at eMarketer. With domestic additions slowing, revenue growth is likely to come from price increases, he said.
The company reported a highly successful quarter at the start of the global coronavirus pandemic, adding 15.8 million paying customers from January to March.
Netflix had warned investors that a sudden spike in new subscriptions would fade in the second half of the year as Covid-19 restrictions eased. Netflix predicted that in the fourth quarter it would attract 6 million new subscribers worldwide, less than the 6.51 million that analysts expected.
The video streaming pioneer is trying to win over new customers and fend off the competition as viewers embrace online entertainment. During the third quarter, Netflix released “Emily in Paris”, “Enola Holmes” and “The Devil All the Time.”
Netflix acknowledged that competition was increasing as Hollywood studios, from Walt Disney to AT&T Inc.’s WarnerMedia, restructured to compete more directly for video subscribers.
“Competition for time and consumer engagement remains vibrant,” Netflix said in a letter to shareholders.
In recent months, major sports resumed play and fledgling streaming services, including AT & T’s HBO Max and Comcast Corp’s Peacock, offered the public new options.
Netflix said its results reflected the fact that it saw such a large increase in customers at the beginning of the year.
“We continue to believe that quarter-to-quarter fluctuations in net paid additions are not as significant in the context of long-term adoption of internet entertainment, which we believe is still early and should provide us with many years of strong future growth to As we continue to improve our service, “the company said.
Netflix officials noted that the company had attracted more subscribers in the first nine months of 2020 than it had in all of 2019. It ended the third quarter with 195.2 million global streaming customers.
“Next time we meet, we should have more than 200 million members, completing a year of 34 million (additions),” an annual record, said Co-CEO Reed Hastings in an interview with an analyst.
The company also said it expected to complete filming of more than 150 productions by the end of the year and that it would release more original programming in each quarter of 2021 compared to 2020.
Revenue increased 22.7 percent to $ 6.44 billion in the third quarter, beating previous estimates of $ 6.38 billion.
Net income increased to $ 790 million, or $ 1.74 per share, in the quarter from $ 665.2 million, or $ 1.47 per share, a year earlier.
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