Netflix bleeds subscribers in US and Canada with no sign of recovery

Netflix lost 430,000 subscribers in the US and Canada in the second quarter and issued disappointing forecasts for later in the year, rekindling investor doubts over how the streaming group will fare after the economic reopening.

The California-based company predicted it would add 3.5m subscribers in the third quarter, disappointing investors who were looking for a stronger rebound in the second half of this year. Analysts had forecast that Netflix would add 5.9m subscribers during the third quarter.

The shares dropped 1.4 per cent in after-hours trading.

The California company added 1.5m subscribers in the second quarter, just above Wall Street forecasts for 1.1m. 

After adding a record number of customers last year, subscriber growth has slowed sharply as new competitors have entered the market and people emerged from pandemic lockdowns.

New sign-ups have ground to a halt in the US, Netflix’s largest market, where the majority of coronavirus restrictions have been rolled back.

“The pandemic has created unusual choppiness in our growth,” the company’s management told shareholders. 

Reed Hastings, Netflix co-chief executive, has rejected concerns over the competitive threat. In the past year and a half, Disney, Apple, WarnerMedia, Comcast and others have launched streaming platforms, and there are now more than 100 streaming services to choose from, according to data company Ampere.

Instead, Netflix executives have blamed a lighter offering of shows and movies and promised that growth would pick up in the second half of 2021 with the return of titles such as The Witcher and Sex Education.

“Covid and its variants make predicting the future hard, but with productions largely running smoothly so far, we’re optimistic in our ability to deliver a strong second half [shows],” the company said on Tuesday.

Still, Netflix remains by far the largest paid video streaming service, with 209m subscribers, compared with 104m for Disney Plus, its closest competitor. 

Revenues in the second quarter were up 19 per cent from the same period last year to $7.3bn, meeting analyst forecasts. Net income increased to $1.4bn, up from $720m a year ago.