Netflix lost subscribers in the United States over the course of the last three months, the company revealed on Wednesday.
In its quarterly earnings report, the streaming giant revealed a net loss of 130,000 subscribers Stateside in the period spanning April 1 – June 30. That’s the first three-month period where the company has failed to add new subscribers on home soil since it split its DVD and streaming business.
There was slightly better news abroad, albeit tempered by lower than expected growth that has seen the firm’s stock price plummet by 10% in after hours trading. It added 2.7 million new subscribers around the world, but that’s way down on the anticipated addition of 5 million new subscribers.
In its earnings report, Netflix admitted the drop off in subscriber numbers was more pronounced in countries where it had bumped up the price. In the US, the firm recently added $2 to the price of a standard subscription, bringing it up to $12.99.
Things are unlikely to get any easier for Netflix in the US with the pending influx of some pretty mighty competition. Apple is launching Apple TV Plus later this year, while Disney Plus is also on the way, taking some of Netflix’s best archive content with it. Earlier this month, Warner Bros. announced the HBO Max streaming service, which will be the new home of Friends, once the contract with Netflix is up.
The company has also announced plans to operate a little more leanly when it comes to original content spending, so we may see a focus on higher quality content, beyond the wide net the company has been casting when commissioning original shows that don’t always produce quality results.
Netflix says it expects to return to tradition growth in the US in the next quarter, perhaps as users come back to consume new releases, less perturbed by the price increase. After that though, it’ll face much greater competition from Apple and Disney, arguably the biggest name in tech and the most prominent brand in entertainment, respectively.
Anticipating this, the company wrote:
“Over the next 12 months, Disney, Apple, WarnerMedia, NBCU and others are joining Hulu, Amazon, BBC, Hotstar, YouTube, Netflix, and many others in offering streaming entertainment. The competition for winning consumers’ relaxation time is fierce for all companies and great for consumers. The innovation of streaming services is also drawing consumers to shift more and more from linear television to streaming entertainment. If you watch Our Planet on a new TV with Dolby Vision or HDR10, you will see why: the quality of streaming television is spectacular. In the US, our most developed market, we still only earn about 10% of consumers’ television time, and less of their mobile screen time, so we have much room for growth. We, like HBO, are advertising free. That remains a deep part of our brand proposition; when you read speculation that we are moving into selling advertising, be confident that this is false. We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction.”