LOS GATOS, Calif.—Is the streaming boom powered by the pandemic starting to fade? One sign that could point to that idea is Netflix, the largest streaming provider in the world, failed to meet its expectations for subscription gains in the first quarter of 2021, adding nearly 4 million new subscribers when it had projected it would add 6 million.
Netflix shared its Q1 2021 results in a shareholders letter sent out on April 20. The new subscribers brought Netflix’s global subscription to 207.64 million, which represents a 13.6% year-over-year growth, however initial projections had Netflix reaching the 210 million subscriber mark by this time.
Those numbers are a far cry from the subscription growths Netflix saw in 2020. Q1 2020, which encompassed the beginning of the pandemic, added 15.77 million net subscribers, Q2 2020 added 10 million and Q4 2020 added 8.51 million. Only Q3 2020 (summer months when restrictions were eased and the weather allowed for outdoor activities) saw smaller subscriber growth in the last year, adding 2.2 million net subscribers.
Broken down by region, EMEA saw the most growth in Q1 2021, adding 1.81 million net subscribers. APAC was next with 1.36 million net additions. The U.S. and Canada added just 450,000 new subscribers. LATAM brought up the read with a net gain of 360,000.
As to why the streamer saw a smaller than projected subscriber growth, Netflix cites a “big COVID-19 pull forward” in 2020 and a lighter slate of new titles because of production delays caused by the pandemic. Such factors may still have an impact on the second quarter of 2021, as Netflix’s initial forecast has them netting 1 million new subscribers. Netflix is more confident in the second half of the year, as popular shows are expected to return and it has a full slate of original movies.
Despite the dip in subscriber additions, Netflix’s revenue actually hit new highs, drawing in $7.16 billion, a 24% year-over-year increase. This growth in revenue is due to the rise in subscribers over the last year while also spending less on content than it initially anticipated.
While Netflix is still the biggest streaming platform, its competition has seen big strides over the last year. Amazon Prime, which includes the Amazon Prime Video service, announced it reached 200 million global subscribers; Disney+ hit the 100 million subscriber mark in a little more than a year; and HBO Max has been adding the most new subscribers over the past two quarters, thanks in large part to its running of big Warner Bros. movies. All of this contributes to Netflix’s belief that streaming is the future for entertainment.
“In the short-term, there is some uncertainty from COVID-19; in the long-term, the rise of streaming to replace linear TV around the world is the clear trend in entertainment,” the shareholders letter says.
