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Costlier Plans, Lack Of Original Content: Streaming Major Netflix Runs Out Of Steam, Loses 126,000 US Subscribers
Netflix logo. (Pascal Le Segretain/Getty Images)
Facing competition from rivals Disney and Apple, online video streaming behemoth Netlix is losing steam, The Financial Times reported.
In the second quarter, Netflix lost as many as 126,000 subscribers in the US and just added 2.7 million subscribers worldwide, way below its own anticipated figure of 5 million new additions and Wall Street forecasts for 5.1 million new users.
Netflix shares plunged more than 10 per cent on Wednesday (17 July), following the company's announcement that it saw a drop in U.S. subscribers.
Netflix CEO Reed Hastings blamed the decline in US subscription and tepid growth elsewhere on the company’s price hikes, and an insipid collection of television shows and movies.
In just over two decades, Netflix’s meteoric rise saw it transforming from a start-up into a company with a $150 billion market capitalisation. While Netflix still has more than 151 million monthly subscribers and more than 60 million US subscribers, the company is struggling with content creation cost and cost of acquiring and retaining new customers.
Netflix spent $12 billion on content in 2018 compared to $9 billion it spent in 2017. The company’s burn is expected to rise to $3.5 billion this year from $3 billion in 2018.
The video streaming space is set to get even more competitive with the entry of Disney Plus and HBO Max. Apple is also gearing up to launch its streaming platform this year.
Netflix is also losing two of its most popular shows–Friends and The Office.
From 2020, Friends will only be available to US and Canadian customers on HBO Max.
The Office is also leaving Netflix next year, as the show's owner, NBC Universal, agreed to pay $100 million a year for the next five years in order to have streaming rights.
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