Thu. May 26th, 2022

Netflix delivered its most recent quarter with disappointing subscriber growth over the last three months of last year, a trend that management predicts will continue into the new year as tougher competition underpins the leading video streaming.

The company added 8.3 million worldwide subscribers during the October-December period, about 200,000 fewer than management had predicted. In addition to announcing its fourth-quarter results on Thursday, Netflix also expected an increase of 2.5 million subscribers during the first three months of this year, well below analysts’ expectations for a gain of 4 million, according to FactSet Research.

Despite hit shows like Money Heist, other services backed by deep pockets like Walt Disney and Apple have made inroads into Netflix's dominance.

Despite hit shows like Money Heist, other services backed by deep pockets like Walt Disney and Apple have made inroads into Netflix’s dominance.Credit:Tamara Arranz / Netflix

The disappointing news caused Netflix’s stock price to dive by about 19 percent in extended trading after the numbers came out, deepening a steep drop over the past two months.

It ended a challenging year for Netflix after reveling in conspicuous progress during the 2020 pandemic shutdowns that drove homeless people to its service.

Netflix garnered 18.2 million subscribers worldwide during 2021, which is its slowest annual growth in five years. It happened after Netflix gained more than 36 million subscribers during 2020. The service now boasts nearly 222 million worldwide subscribers, more than other leaders in video streaming.

But other services backed by deep pockets like Walt Disney and Apple have made inroads in recent years, and a number of other networks are also stepping into video streaming in an attempt to grab the eyes and a piece of household budgets. The escalating competition is one of the reasons why Netflix decided to expand to video games last year.

While acknowledging that competition has a “marginal” effect on its growth in its quarterly shareholder letter, Netflix stressed that their service is still thriving in all countries where it is available.

The company is also doing well financially, although its subscriber growth is slowing down. Netflix earned $ 607 million ($ 840 million), or $ 1.33 per share, in the fourth quarter, up 12 percent from the same time last year. Revenue in the fourth quarter increased 16 percent to $ 7.7 billion.

However, investors are becoming more concerned that Netflix may be approaching its peak in popularity. These concerns have caused Netflix’s stock price to fall by more than 30 percent from the peak of around $ 700 reached in mid-November.

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