Netflix slows its growth with the gradual end of confinements

Covid-19 restrictions could be expected to cause unprecedented growth in the community of Netflix, but it has not been like that.

The publication of the financial results for the first quarter of 2021 of the platform shows its worst growth data in the last 8 years.

In a letter addressed to its shareholders, the CEO of Netflix Reed Hastings excuses the slow growth of users in two pillars: “the impact of Covid-19” and the delays in production due to health measures. The difference compared to the first quarter of 2020 is evident: while 15.77 million new subscribers were added that year (a record number), this figure was reduced to 3.98 in 2021 (a number very far from the 11 million predicted by numerous market analysts). Growth slows, but economic profit (related to new subscription models) remains at a healthy 24.2%.

The forecasts for the second quarter of the year are not optimistic either: 1 million new paying users, supported especially in the markets of Latin America, the United States and Canada. In parallel, Hastings has once again underlined the value of its strategy based on the creation of global original content. In sight, new seasons in sight of formats such as Sex Education, The Witcher, La Casa de Papel o You; accompanied by other original productions such as The Kissing Booth, Red Notice o Don’t Look Up. Even so, Hastings recognizes that two of its fastest growing markets in recent years, Brazil and India, will see their new formats delayed due to the health difficulties in both countries.

Against linear television

At the level of product development, the CEO of Netflix highlights that the option Download for You, which allows automatic downloading of recommended series on user devices, will arrive on iOS very soon. In the same way, Fast Laughs, he feed mobile of small humorous fragments of the comedies in the Netflix catalog, will reach new markets and Android phones soon.

In the previously mentioned document there is no reference at any time to the fact that new competitors, such as Disney+ o HBO MAX, could well have influenced the slowdown in Netflix's growth. In a question and answer session after the financial results, Reed Hastings wanted to point out that, despite these new market players, its direct competitors are others: "our main competition is linear television. Afterwards, Youtube, which substantially surpasses Netflix in terms of viewing time. Disney is considerably smaller.”