The streaming service reported Tuesday it now has 208 million subscribers globally, after adding 4 million subscribers in the first quarter of 2021, but missing its own expectations of 210 million.
Netflix’s first quarter profit this year was $1.7 billion, up from $709 million in the year-earlier quarter. Its revenue jumped 24%, to $7.1 billion. So the company’s earnings were good, but all eyes were on its big subscriber miss as well as a weak forecast for subscriber growth for the next quarter.
The company’s stock dropped as much as 11% in after-hours trading following the company’s earnings.
According to Netflix, the company did so well last year that it was hard for this quarter to compare.
“We believe paid membership growth slowed due to the big Covid-19 pull forward in 2020,” Netflix said in its letter to investors on Tuesday.
The company noted that “a lighter content slate in the first half of this year, due to Covid-19 production delays” also played a part in the sluggish subscriber growth.
Most importantly, the service said that as production returns to normal around the world, it plans to spend more than $17 billion on content in 2021.
“We continue to anticipate a strong second half with the return of new seasons of some of our biggest hits and an exciting film lineup,” the company said. “In the short-term, there is some uncertainty from Covid-19; in the long-term, the rise of streaming to replace linear TV around the world is the clear trend in entertainment.”
Another major issue for Netflix that may have hurt its user base: it’s no longer the only streamer in town.
“More and more new streaming services are launching, reinforcing our vision that linear TV will slowly give way to streaming entertainment,” Netflix said. “Despite our 10+ year head start, we are continually seeking operational and creative excellence; we’re working as hard as ever to continually improve our service so that we are the best entertainment option available.”
Despite coming up short on the number of new viewers, Netflix remains Netflix — the biggest company in the streaming world. While the subscriber miss and lackluster projections for the next quarter are reasons for concern, the company has the resources to rebound.
So the question going forward for Netflix is this: Can it still be king of streaming as it competes with more options for consumers, which now includes getting vaccinated and potentially leaving their couches.