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Netflix down 130K subscribers, lost $594 million as they overspend for programming

With the upcoming loss of two of its most-streamed television series, The Office and Friends, Netflix has had a tough few weeks. On Wednesday, the company faced down another bout of bad news.

photo/ Jorge Gryntysz

For the first time in nearly a decade, the number of people subscribing to Netflix in the U.S. declined, an underwhelming performance for the streaming giant that comes as a slew of rivals are about to enter the field.

Bloomberg notes that “The shares plunged as much as 12% to $320.30 in New York Thursday, tumbling toward the worst one-day drop in three years, after the company reported a loss of 130,000 customers in the U.S. Netflix blamed higher prices and a weak slate of TV shows. It signed up 2.8 million subscribers internationally in the period, roughly half what the company predicted.”

There was a prediction of 5 million new subscribers according to analysts.

Netflix shelled out more than $3 billion on programming in the quarter and another $600 million to market its shows. The company spent $594 million more than it took in and will need to raise money to fund programming.

“Netflix has a difficult road ahead, with looming competition and the removal of popular content,” said EMarketer Inc. analyst Eric Haggstrom. But a stronger lineup of new shows in the current quarter could help attract former subscribers, he said.

In addition to blaming its content slate for the quarter for weak subscriber growth, Netflix said its first-quarter subscriber growth was so strong that “there may have been more pull-forward effect than we realized.”

Netflix added that its subscriber miss occurred across all regions, but slightly more in areas where its price increase went into effect. Netflix announced in January that its plans would go up in price starting with the May billing cycle. Its standard plan now costs $13 in the U.S.

Wall Street dropped the value of Netflix shares by 10 percent Wednesday. The company thinks it will add 7 million subscribers in the third quarter—more than Wall Street expected it to predict—driven in part by a new season of Stranger Things.

Netflix’s biggest turnoff, at least for half the country, is its political preening. In his own look at Netflix’s recent woes, Christian Toto laid this out perfectly:

  • The company named former Obama advisor Susan Rice to its Board of Directors.
  • Former President Barack Obama signed a massive deal to create new content for Netflix.
  • The company threatened to pull productions like “Ozark” out of Georgia to protest the state’s strict new abortion rules.
  • Netflix brass brushed off concerns that “13 Reasons Why” inspired real-life suicides … until it didn’t.
  • The streaming company still lacks a go-to conservative show.

Note that all of this is ahead of Disney+ arriving in November and a Warner Bros service starting next year.

Netflix down 130K subscribers, lost $594 million as they overspend for programming

photo: TaxRebate.org.uk

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About the Author

- Roxanne "Butter" Bracco began with the Dispatch as Pittsburgh Correspondent, but will be providing reports and insights from Washington DC, Maryland and the surrounding region. Contact Roxie aka "Butter" at [email protected] ATTN: Roxie or Butter Bracco

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