October 29, 2020

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Period of strong growth at Netflix behind us

Period of strong growth at Netflix behind us

Reed Hastings (left) gets Ted Sarandos (right) as the top man next to him.

Photo: AP

Video streaming service Netflix attracted more than 10 million new subscribers in the second quarter. Due to the Corona crisis and the massive home session, sales and profit rose sharply as a quarter before. But the U.S. company is cautious in its expectations for the third quarter. The end of the period of strong growth already seems in sight.

Netflix saw the total number of paying customers rise to about 193 million last season. The increase of more than 10 million was not as strong as the record of almost 16 million in the previous three months, but still above average. According to Netflix, it’s likely to be back this summer with strong growth. The company expects only 2.5 million new subscribers in the third quarter.

Share down

Many analysts had not seen the latter coming. In general, they expected more than 5 million additional customers in the coming period. Investors reacted with shock. Netflix shares fell sharply in after-hours trading in New York on Thursday.

Expectations around Netflix have been high lately, with many people flocking to the lockdown measures to find forms of entertainment at home. On the other hand, Netflix now faces competition from rival streaming services such as Amazon Prime Video and Disney+.

More profit

The Corona period has done Netflix very well financially. Revenues in the second quarter of last year were almost a quarter higher, at USD 6.1 billion. Below the line was 720 million U.S. dollars, with a profit of 271 million U.S. dollars on the books a year ago.

Netflix also announced the appointment of Ted Sarandos as co-star. He has been a senior member of the company for many years and has had an important board vote for some time, according to Reed Hastings, who has been the only chief executive on paper to date.