Just like Emily in Paris... Netflix's quarter didn't go as planned. Netflix added just 2.2M subscribers in its third quarter, less than the 2.5M it forecast and waaay less than the 3.6M analysts expected. Netflix stock dropped 7% because in the markets, everything is relative:
- Netflix added nearly 16M subscribers in the 1st quarter of this year, and over 10M in Q2, making its latest quarter look even worse.
- It's forecasting just 6M new subs this quarter, and expects paid subscriber additions to be down for the first half of 2021.
The boom is over... Netflix saw explosive growth during the first half of the year, as we hibernated with our laptops and instant ramen. It became a utility (gas, electric, and Flix) — but that also led to more subscripturation (aka: subscription saturation).
- Netflix already takes up 72% of US home streaming time. Plus, consumers are now spoilt for choice with newbie streamers like Disney+ (RIP Quibi). That's why...
- Netflix added only 180K subscribers in the US and Canada. Subscribers in the Asia-Pacific region were the largest growth contributors, making up 46% of all newbie additions.
Netflix needs to get creative to reach non-streamers... It has 200M paying subscribers, but its next 100M will probably be streaming virgins — everyone else is over-subscribed. That's why Netflix is looking to emerging markets like India and Brazil for future growth. It's even offering a free, 48-hour streaming event in India — and it probably won’t even ask for payment info.