In 2020, Netflix, the world’s most popular video streaming service added 36 million subscribers. Following this record, their subscriber growth slowed significantly in the first six months of 2021, adding just 5.5. million subscribers according to the company’s latest earnings. During the same period one year ago, Netflix added over 25 million subscribers. In the three months ended June 30, Netflix’s lowest quarterly gain since Q2 2013 was marked by adding just 1.5 million subscribers globally.
According to Netflix’s assessment of the slowdown, the company became a victim of last year’s success, when an overwhelming amount of customers signed up in the midst of the stay-at-home orders with limited options to spend their spare time. Many of those subscribers might otherwise have signed up this year, creating what the company calls “some lumpiness in our membership growth” in its letter to shareholders.
Although the unexpected 2020 growth is arguably the major driver of the latest slowdown, the pandemic-related production delays also played a role, creating a weakened content slate for the first half of 2021. Netflix hopes to see subscriber growth pick up again, projecting a net addition of about 3.5 million subscriptions for the third quarter. This is due to the content line-up geared towards the second half of the year. If the expected projection is met, the company would have added 54 million subscribers over the course of 24 months, which is roughly in line with its pre-pandemic growth trajectory.
While the post pandemic growth may sound alarming at first glance, Netflix’s growth experience is a reaction to the global situation. The company was able to re-adjust and bounce back to the expected business growth. Understanding your business, industry and your consumers helps you take better decisions that keeps businesses alive and unshaken in the midts of unexpected occurences like the recent pandemic.
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