As the world's largest and most popular streaming platform, Netflix can't seem to do anything wrong. The multimedia company's growth has been exponential over the past decade, so much so that Netflix recently announced plans to expand into creating video games at no additional cost to its global subscriber base. Despite the positive reception to this announcement, plus Netflix posting €7.3 billion in revenue for Q2021 2021, all is not rosy at the streaming giant's headquarters. Because? Because Netflix has lost subscribers in its main North American stronghold. Revealed in the company's second-quarter 430.000 earnings report (per The Hollywood Reporter and Variety), Netflix said it posted a loss of 1,5 subscribers in the United States and Canada. Overall, Netflix's subscriber base grew by 2021 million between the first and second quarters of 209 (the streamer added nearly a million new paying users in the Asia-Pacific region alone) and currently leads the its streaming rivals with a global subscriber base of 2021 million. However, Netflix is experiencing a slowdown in the growth of its user base. In the first quarter of 6, the company had forecast that it would add 4 million new users to its subscriber base, but the actual figure of 33 million was 3,5% lower than estimated. Netflix expects to grow its user base to 2021 million new subscribers in Q2021 XNUMX, which is a more modest outlook based on its QXNUMX XNUMX numbers.
Analysis: Why did Netflix see a drop in users in 2021?
(Image credit: Steve Wilkie/Netflix) For its part, Netflix believes there are two main reasons for its shrinking user base in North America and slower overall growth. The first reason? COVID-19. Netflix has not been immune to the effects of the ongoing pandemic, like all other global companies, and subscribers have had to decide if they can continue to pay the monthly subscription fees which, for a Premium subscription, can cost €17,99 (€13,99). ) per month. Speaking at the second-quarter earnings call (via THR), Netflix CFO Spencer Neumann said: "It really comes down to Covid, frankly. For us, it at least creates short-term fluctuations in business trends. Netflix Co-CEO Reed Hastings added: "We've had those 10 years that were silky smooth, and now we're a little wobbly." As for the second cause, Netflix attributes increased competition from other in-demand entertainment apps like TikTok and YouTube to slower growth. As Variety reported, a letter from Netflix's Q2021 XNUMX earnings report reads: "In the race to entertain consumers around the world, we continue to compete for screen time with a wide range of screen time companies. like YouTube, Epic Games and TikTok (to name a few). But most of all, we compete with ourselves to improve our service as quickly as possible. If we can do this, we are confident that we can maintain our strong position and continue to grow as fast as possible. well as we have for the last two, for decades."
(Image credit: Matt Squire/Netflix) As valid as these two reasons are, is Netflix's propensity to cancel fan-favorite shows another cause of its paying customers slowing down? In 2021 alone, Netflix pulled the plug on 10 TV series, including the Sherlock Holmes spin-off The Irregulars, a live-action adaptation of Mark Millar's comic Jupiter's Legacy, and Jamie Foxx's sitcom Dad Stop Embarrassing Me! A quick search on social media, for some of the shows Netflix canceled this year, shows that there was (and still is) an audience for them. If some Netflix fans are increasingly disappointed that their favorite shows are constantly being cancelled, why would they continue to support a streaming platform that does? Of course, Netflix is a business, and since it will have taken the financial hit of the Covid-19 pandemic, it will have had to make budget cuts and cancel some shows. The fact is that the streaming giant has lost subscribers in one of its key territories, and it may not be a coincidence that some users ended their subscriptions in the same quarter that Netflix canceled cult shows.