Uneasy Time At Netflix
No doubt about it, Netflix has had an epic run over the past decade. As the “N” in FAANG, Netflix pioneered and then mainstreamed OTT video. Along the way they’ve outperformed on both sides of their business model with triple digit growth numbers for both subscribers and stock price. But we’re starting to see an early distant warning about esoteric challenges which could threaten the streamer.
Last week Netflix reported its Q2 earnings, and for the first time in almost forever their audience growth numbers took a hit. US subscribers went down (for the first time ever) by 130,000 compared to Q1, and worldwide sub growth was way off – they only added 2.7M compared to a forecast of 5.5M. The slowdown in growth comes as rival streaming services from Disney, Apple, AT&T and Comcast prepare to launch.
The biggest challenge for Netflix moving forward is that the competing streamers will remove their owned content in order to make it exclusive on the the new platforms. With less of the best content on Netflix investors are worried that subscriber attrition will accelerate.
It’ll be interesting to look back on this moment a year or two from now to see if we’re at an inflection point in Netflix’s business model.