Netflix released its earnings report for 2019's second quarter today, and it appears that the streaming giant is losing subscribers due to what it perceives as a lack of strong original content. Netflix is well-known for being the streaming service that most focuses on creating new original content. This year, it outspent all of its current competitors when it came to originals.
Sometimes, that pays off with massively popular shows like Stranger Things and Daredevil. Other times, it backfires with little seen fare like Triple Frontier. However, between its big budget hit series, its anime programs, and its original films, Netflix is betting big on its own content and less on licensed shows. For the first time, the company thinks that approach might have let them down.
Deadline reported that Netflix only added 2.7 million new subscribers for this quarter, down from the 5.5 million it added over the same time last year, and lower than the 5 million the company predicted. The lack of growth was noticeable across the world, but the areas with the lowest growth were ones impacted by a recent subscription price hike. However, the company explained that it didn't think the price increase was the issue. Instead, company executives think their slate of original programming just wasn't as good as it needed to be. In a letter to shareholders, the company stated, "we think Q2’s content slate drove less growth in paid net adds than we anticipated."
The news has already had strong effects on Netflix's stock price, driving it down 13%. Of course, Netflix is far from dire straits, as it actually gained more subscribers than anticipated in Q1 2019, and believes that contributed to low growth in Q2. The company has also had strong revenue earnings all year. Netflix added that it thinks Q3 will see a large uptick in subscribers, largely due to season 3 of Stranger Things premiering in that window, and the upcoming The Witcher airing later this year.
The quality of Netflix content has been a talking point ever since it started facing serious competition. Notably, while Netflix is known for having several globally popular shows such as Black Mirror and The Haunting of Hill House, it wasn't the first streaming service to win an Emmy for Outstanding Drama. That honor went to Hulu. Amazon followed that up by winning an Emmy for Outstanding Comedy. Netflix has yet to win top honors. Even if Netflix is downplaying the effects its competitors are having on the lack of subscription growth, there's no real way to deny that those competitors are forcing potential customers to choose where to spend their money as Netflix's prices keep increasing. With Disney+ and HBO Max on the horizon, and so many programs being pulled from their platform, Netflix will definitely have to rely on its own original content to stay relevant in the new age of TV streaming.