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Netflix’s Oscar buzz meets reality: Slowing subscriber growth

April 25, 2021, 12:30 PM UTC

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Netflix’s slowing subscriber growth, revealed this week, shocked investors like a horror movie.

Instead of being able to focus solely on its nearly three dozen nominations at Sunday’s Academy Awards show, the company must now contend with a depressed stock price—its shares tumbled 10% following a disappointing earnings report on Tuesday—and questions about its rivals catching up. 

But some industry analysts are optimistic that Netflix, still the largest streaming service, can dodge the zombies. They point to several hit series, delayed by the pandemic, that are scheduled to be released over the course of 2021 that could lift subscriptions. 

“When you look at the second half of the year we see Netflix coming back strong with some of its most in demand shows returning in Q4 including Cobra Kai and The Witcher,” said Christofer Hamilton, an analyst at the media research firm Parrot Analytics. 

Although Netflix reported some good news on Tuesday regarding revenue and profit, investors were laser focused on subscriber growth. And those numbers were weak, compared with the first quarter of last year when the lockdown caused a record surge in sign ups. 

Netflix added four million net new subscribers in the first quarter, two million less than the company had forecast. Even worse, the company said it would add a measly one million subscribers in the second quarter. 

During Netflix’s earnings call, CFO Spence Neumann explained that Covid-related production delays had made it difficult to forecast the business and release new content that could attract subscribers. 

Similar to other studios waiting out the pandemic, Netflix pushed many new releases to the second half of the year. A strategy that AT&T CEO John Stankey called “snowplowing” which he criticized for crowding theatrical releases during late 2021 and early 2022.

Taking a different approach, WarnerMedia, owned by AT&T, decided to premiere all of its films in cinemas this year at the same time it makes them available on its sister service, HBO Max. The strategy seems to be working. The recently released spectacle Godzilla vs. Kong has so far grossed over $400 million in theaters and is one of the biggest box office successes of the pandemic. The film premiere also scored the biggest audience for HBO Max since the platform launched nearly a year ago, according to media analytics firm, Samba TV. “We’re making lemonade out of lemons,” Stankey said during AT&T’s earnings call with analysts this week.

Unlike Netflix, AT&T’s stock rallied after the company disclosed that its fledgling streaming service had added 2.7 million subscribers in the first quarter. Subscribers for both HBO Max and HBO now total 64 million worldwide, a milestone reached two years ahead of AT&T’s internal plan.

Where content is king


The mastermind behind Netflix Originals, co-CEO and chief content officer Ted Sarandos, assured Wall Street that his company is still knocking out the hits. In the fourth quarter, he promised that Netflix would resume its slate of releases with the return of popular shows like Bridgerton, which has over 100 million views, along with The Witcher, You, Cobra Kai, and the French thriller Lupin, the biggest new series on Netflix last quarter, according to Sarandos. Highly-anticipated tentpole movies like Red Notice starring Hollywood action heroes Ryan Reynolds, Gal Gadot, and The Rock, and Escape From Spiderhead with Chris Hemsworth, are also expected later this year.

“What Netflix does better than any other streaming service is take its originals and turn them into short-term hits, then release them one after the other, creating successive spikes in demand,” said Ed Border, from Ampere. “That’s where its pipeline is really important — Netflix’s most popular 30 to 40 titles are originals that were released in 2020 for the first time. Whereas other platforms have just a handful of originals, Netflix has a constant stream.” 

Netflix also has the most robust catalogue of the subscription services, according to Border. Ampere estimates that Netflix has 3,700 movies and 2,000 TV shows. That’s substantially more than HBO Max’s 2,100 movies and 600 TV shows; Hulu’s 1,200 movies and 1,700 TV shows; and Disney+’s 900 movies and 300 TV shows.

Photo Illustration by Josue Evilla/Fortune; Original Photograph by Kurt Krieger—Corbis/Getty Images; Courtesy of Netflix

Stay tuned


With Netflix going into Oscar weekend leading the pack with 35 nominations, cofounder and co-CEO Reed Hastings announced plans on the earnings call that the company will boost spending on filmmaking.

He made clear that as an entertainment company, Netflix will continue to do what it does best — tell stories across an ever-expanding range of categories, including animation, kids, games and unscripted.

With Netflix’s more than 200 million subscribers worldwide and in more than half the U.S. households, Hastings sees its main competition traditional TV and YouTube, not so much the streaming services. Eyeing the billions of users that YouTube and Facebook have amassed, he said, “We have lots of room to grow.”