Netflix Sees First Subscriber Losses Ever

from the adapt-or-perish dept

Netflix has certainly enjoyed its flight to the top of the heap of the streaming space, now streaming video to 60.1 million US subscribers. That’s more than pay TV giants like AT&T or even Comcast, who’ve done their best (via usage caps and lobbying shenanigans) to unsuccessfully hamper Netflix’s meteoric rise.

But there’s some indication that the company may have started to reach its high water mark. Netflix this week revealed it lost 130,000 subscribers last quarter, the company’s first quarterly subscriber loss in history. The losses come despite Netflix having spent $3 billion on programming last quarter, and another $600 million to market its its wares. The loss was quick to rekindle memories of Netflix’s bumbled Qwikster, price hike debacle from back in 2011:

“Investors had been forgiving about the spending and the debt — so long as customers grew at record rates. But the loss of subscribers in the U.S. was the first since the Qwikster debacle, and it suggests Netflix may be running into price resistance or the limits of the addressable domestic market. The company has forecast it can reach as much as 90 million customers in the U.S., compared with 60.1 million currently.”

In a letter to investors, Netflix downplayed the rise of streaming competition, blaming the losses on its own price hikes and a fairly underwhelming content slate during the quarter:

“Our missed forecast was across all regions, but slightly more so in regions with price increases. We don?t believe competition was a factor since there wasn?t a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions (while our over-forecast was in every region). Rather, we think Q2?s content slate drove less growth in paid net adds than we anticipated.

Given all the premature hand wringing and predictions of doom that surrounded Netflix after the Qwikster face plant, anybody suggesting Netflix will suddenly start to free fall is likely jumping the gun. Netflix’s third quarter kicked off with the launch of Stranger Things season three, which will likely help drive subscriptions skyward again. And Netflix executives also seem to be slowly realizing that throwing around billions of dollars for mediocre international content at a mind-boggling scale may not be the winning strategy they originally surmised.

That said, this is only really the beginning of Netflix’s challenges. Giants like Disney, AT&T, and Comcast are all rushing to pull their growing slate of TV shows and movies from Netflix and shift them exclusively to their own new streaming platforms. Studies suggest that nearly every broadcaster will launch their own streaming service by 2022. That’s not only going to create greater losses due to competition, but the added cost and confusion of so many exclusivity silos is going to likely drive a significant number of users back to piracy, something the streaming sector hasn’t really figured out yet.

In other words, despite a lot of pearl clutching Netflix is likely to clear its current hurdles. It’s the rise of an ocean of streaming exclusives (especially by telecom providers given the death of net neutrality) and a shift back to piracy Netflix will really need to worry about over the next five years.

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Companies: netflix

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Comments on “Netflix Sees First Subscriber Losses Ever”

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Anonymous Coward says:

Re: Re:

No, they are not. Netflix’s monthly fee is a small fraction of a cable bill and isn’t going to drive up at any rate that will outpace inflation. They know doing so would doom them and it’s bad business.

we think Q2’s content slate drove less growth in paid net adds than we anticipated.

Being a long time Netflix customer I think this is almost exactly right. It just lacks a bit of detail. A deficient "content slate" is certainly a large part of why I watch a lot less Netflix content these days. But they are certainly already feeling pressure from all of the upstart vertically focused streaming options that have begun to appear everywhere. As the article noted, but perhaps without the right emphasis, every content producer on the planet is trying to start their own streaming site and charge $6 to $20 per month for it. This dilution has to already have affected Netflix’s numbers and will continue to do so until the myriad streaming services start going broke for lack of subscribers.

Viewers will only subscribe to two, maybe three streaming sites at any given time. There isn’t a huge pool of untapped viewers out there just waiting for Disney or CBS to start their own streaming service. All of these new services will only spread out the dollars and put them all under financial pressure. The winners will be those who can weather this storm and the losers will all move their content back to just a few main streaming services. It’s going to suck a little for all of us viewers for a while but it will eventually get better again.

I will say that I hope Netflix comes to their senses when the time comes and puts their money back into licensing others’ content. 90%+ of their own content sucks pretty badly.

nerdrage says:

Re: Re: Re:

Netflix can’t license others’ content. All the licensed content producers are now dead set on being Netflix competitors. I suppose its possible that they will retrench and just make shows in the future for Netflix after realizing the streaming business is too tough for them but most likely failure will mean they will be bought up by some streaming behemoth like Disney or AT&T and then their content will be just as inaccessible to Netflix.

MikeVx (profile) says:

The rise had to stop eventually

Fragmentation and silos are going to be an increasing problem in this space. The potential value of Netflix as a streaming service has been dropping like the proverbial rock lately, and that doesn’t even factor in the other ways they are limiting their market.

I am one of those people for whom logos, credit squeezing, and other picture abuses are not tolerable. The habit of starting a video stream if you take more than 3 seconds to read a program description is irritating also. I tried Netflix on a free trial, and that was good because the interface and behavior were so annoying that there is no content good enough to pay for under those conditions. Most of the services appear to be bringing in all the bad habits that drove me off broadcast and cable into the streaming arena, as well as inventing new ones. (I’m looking at you, Netflix, with your logo-over-paused-program and auto-starting video while I’m reading a description.)

Based on what some friends have shown me, the only subscription service that I would consider usable is Crunchyroll. And that assumes that it behaves on my model of Roku the way it did on his. Time to see if they have a free trial.

Anonymous Coward says:

Re: The rise had to stop eventually

The habit of starting a video stream if you take more than 3 seconds to read a program description is irritating

I absolutely hate this. For those on mobile devices it also consumes huge amounts of data for no viable reason. This should be an option that we can turn off. The rest of their UI is good with the exception of their recent change that prevents you from scrolling left to cycle through the content; That was a bad decision. Still, their UI is better than just about all the rest of those offered by other streaming services.

nasch (profile) says:


the company’s first quarterly subscriber loss in history.

Was it?

"It told investors that it ended the third quarter of [2011] with 800,000 fewer subscribers in the United States than in the previous quarter, its first decline in years."

And Netflix executives also seem to be slowly realizing that throwing around billions of dollars for mediocre international content at a mind-boggling scale may not be the winning strategy they originally surmised.

Quantity is literally worthless without quality. Better to have one really great show than 10 or 100 blah ones. Perhaps they have no idea how to recognize good content, and are just acquiring as much stuff as possible in hopes some of it will be good?

renato (profile) says:

Re: First?

> And Netflix executives also seem to be slowly realizing that throwing around billions of dollars for mediocre international content at a mind-boggling scale may not be the winning strategy they originally surmised.

Quantity is literally worthless without quality. Better to have one really great show than 10 or 100 blah ones. Perhaps they have no idea how to recognize good content, and are just acquiring as much stuff as possible in hopes some of it will be good?

I’m not sure if they are spending money on them.
Some (most ??) countries have quotas of local shows or movies that need to be included, and even without a formal quota, users will also want the local popular shows.
For most of them, I guess there is no difference of licensing it locally or worldwide, and what matters is just getting in licensed by Netflix.

PaulT (profile) says:

Re: Re: First?

It’s the other way round, I think. Netflix has proven to be a lot more adventurous than “traditional” outlets with what it’s licensing so people are being exposed to some of this stuff for the first time. The headlines are always about the silly money they’ve been spending on Friend and Adam Sandler so people assume they’re spending the same one that Korean drama.

It’s not about local quotas so much as it is people seeing stuff they’d never have known existed

Anonymous Coward says:

Re: First?

Quality is in the eye of the beholder. I find plenty of good shows to watch on Netflix: Glow, Mindhunter, Russian Doll, The Haunting of Hill House, Bojack, Lemoney Snicket. All originals. Plus some good foreign acquisitions: Fauda, Berlin Babylon, The Last Kingdom. They could stand to have more sci fi, especially space based sci fi, but there are some shows in that category being made too.

Other than just providing a wide range of content hoping to hit everyone’s niche tastes, there’s the Disney strategy: just buy a few huge brands like Star Wars, Marvel, Pixar and Avatar, and spin out new movies and series under those brands. Don’t scatter your budget around widely; put it all into a few big properties. I bet this works great for Disney globally but to pull it off, you have to have the big brands to begin with. Or build them. Very hard to do. The closest Netflix has come is Stranger Things, but we don’t see Stranger Things movies raking in a billion dollars at the box office.

Anonymous Coward says:

Re: Re:

this exactly. Specifically Netflix had a net loss of 130,000 subscribers in the US, but a net gain of 2,700,000 subscribers worldwide. They were expecting to gain 5,000,000 subscribers worldwide.

Possibly a warning sign, but definitely not the doom and gloom that many outlets are reporting.

Anonymous Coward says:

Re: Re: Re:2 Re:

They must be some of those mythical self made success stories I have read so much about. These folk are able to pull themselves up by their own bootstraps, just think about that as it is almost super human attributes right there. They should be wearing spandex because they are super heros. They got a small loan from their parents and parlayed it into millions and millions of self made wealth. A real success story right there huh. If only more people had these qualities there would be no poverty or suffering would there … everyone would be a millionaire sipping their mint julip whilst watching the Kentucky Derby and laughing at all those silly hats.

Bt Garner (profile) says:

In addition to US lost customers, it would be interesting to see how many US subscribers downgraded their account. What you are seeing here is the folks who probably switch streaming providers on a regular basis, coupled with the recent price hikes. It would be very telling to know how many of those remaining subscribers cut back on what tier of service they are paying for.

K`Tetch (profile) says:

We’re about to cancel.

We got it 5 years ago when we got a TV set (the last time we’d had any tv service was back in 2006, on a 19" zenith). It was great, used it all the time.

it’s been loaded maybe a dozen times in the past 3 months. There’s nothing on there any more, except 3rd rate shows. The good stuff is gone. They’re now just throwing money at any old crap. and the one-way scrolling on the xbox app is also annoying as hell.

We’ve spent more time on hulu this past year, but with the fragmentation, we’re thinking about torrenting again.

PaulT (profile) says:

I think the issue might be one of their own creation to a degree – binging. A lot of people prefer to burn through series in a week/weekend rather than pacing themselves. That means that they get to the end of series they like more quickly and are left wanting for more.

The problem is, Netflix can’t realistically have enough original productions to please everybody, and the fragmentation beyond their control that’s infecting the market means that people are more likely to switch services.

I suspect that a lot of these "lost" customers are people who will subscribe to other services for a month or two then come back. New season of Star Trek Discovery on? OK, cancel Netflix and get CBS. Then, cancel CBS and subscribe to HBO to watch GoT. Then subscribe again to Netflix to catch the latest title there. So, people who were subscribing to Netflix every month are now only subscribing 1/3 of the time, even though they are subscribing to something.

I don’t personally get that attitude as I find more than enough to watch on Netflix without having to play games chasing other things, but I know I’m not in the mainstream.

Anonymous Coward says:

Re: Re: Re: Re:

What I don’t get is the movies that get surfaced that have full English descriptions and English titles, and when you go to watch it, everything is in a foreign language with little to no effort made on subtitles.

So whether or not it’s good, I’d never know. But they want their clickthroughs, so there’s no language marker when the thing’s first displayed as a recommendation.

Does this happen to US customers too?

PaulT (profile) says:

Re: Re: Re:2 Re:

I can’t speak for the US, but my general experience is that language options are geared toward the native language of where you are located. It’s hit or miss whether you get English options where I live in Spain for example if the original language is something else. Some Chinese movies do, some don’t, etc. Weirdly that even happens on content I know they have in the UK with full subs.

It’s annoying but at least you have language options, which isn’t always the case on other services.

Anonymous Coward says:

Re: Re: Re:2 Re:

Yes, yes it does. I can’t remember all the times I started a show that looked interesting based on its English title and description only to find nonsensical subtitles that are badly synced with the video. I immediately back out, give it a thumbs down and continue looking for anything interesting to watch. Or just shut it off and go do something else.

Ninja (profile) says:

Re: Re:

I decided that if it isn’t on Netflix then it either doesn’t exist or, if it’s one of those things that MUST be watched (a rarity these days) I started pirating again. After a hiatus of quite a few years.

Back to your comment, I think you got the main problems. In the end we shouldn’t be having to choose because somebody has some content and others don’t, it should be a matter of service quality, ease of use and value. There is that idea of a copyright pool that has been discussed here already. It’s past time we moved towards something like that. Then again it’s also past time we reduced copyright terms and this ain’t happening anytime soon.

Anonymous Coward says:

Re: Re: Re:

None of these corporations have a motive to create a copyright pool. Their exclusive content they create is the weapon they use in the streaming wars in order to kill the competition. So every time you hear about a show or movie being made for a streaming service, envision a gun pointed at competitors because that’s really what it is. Nobody is sharing guns with the enemy they are trying to kill.

Anonymous Coward says:

Re: Re: YES - à la carte

All of these little content silos popping up are exactly the a la carte we asked for when cable was king. The problem is that each one wants too much so it isn’t worth subscribing to more than a couple of them. Apparently economies of scale are what gave us 300 channels for $100/month, or about $0.33/month per channel. Without the subsidizing effect of hundreds of channels you get to pay far more for each channel you really want.

You can safely bet that if they all switched to per-per-episode that your $10/month for the whole channel would quickly balloon to far more than that and only include the shows you’re watching.

Aggregation is the only solution. Just give it time.

Anonymous Coward says:

Re: Re: Re: YES - à la carte

Without the subsidizing effect of hundreds of channels you get to pay far more for each channel you really want.

Really? It was the channels that you wanted that subsidized the hundreds of others, which is why popular channels got split amongst several packages.

PaulT (profile) says:

Re: Re: Re:2 YES - à la carte

Well then it depends on what the channels you want are. ESPN is known to be struggling without the subsidising effect, but whether that’s an effect in the positive or negative depends on if you wanted that channel. People who want it are paying more, people who never wanted it are happy to pay for what they actually want.

John85851 (profile) says:

They should invest in older shows

This reminds me of investing in comics books when I was younger. I still remember a comic book shop owner telling me to invest my $50 in 1 or 2 older comics that already have a high value instead of spending it on 10 "hot" comics that came out this month.

I think Netflix is having the same issue: they spend millions on Stranger Things or the latest "binge-able" show… which only has 13 episodes! This "binge" only takes one weekend!
Yet that same millions of dollars could be spent on older shows with 6-7 seasons / 25-26 episodes per season, or about 200-250 episodes.

The reason I signed up for Netflix years ago was because they had the complete series of tons of shows from 1980’s and 1990’s: The A-Team, Amazing Stories, Cheers, Family Ties, Frasier, G.I.Joe (cartoon), Knight Rider, Growing Pains, Robotech (cartoon), every Star Trek series including the animated one, Transformers (cartoon), and so on. They also had all the seasons of all the CSI shows, which my wife likes.
But now, almost none of these are on Netflix, so I cancelled our subscription.

However, the issue is that there are no older shows to invest in, since they all owned by other studios who want the content for themselves.

ECA (profile) says:

I have a few friends(not even that many)

Around the nation who have had some interesting problems recently..
DSL is really SUCKING..
5-7 mbps?? and mostly cause they dont want to change over the old 2 wire system..

Friend had to Diagnose some tech problems and WHY certain things were happening.
During a game and Audio chat his modem would Just QUIT..

  1. High quality Audio chat, takes bandwidth..
    2, other devices(Roku, Alexis, others) also wanting Access..
  2. the Games, even ones created to use the Least amounts of data transfer..
  3. every tablet and phone that connects to wifi..
    5, Old network Box from ATT, not upgraded in 10 years??

He had to look into the modem and see what was happening, found that the VOIP protocols (obsolete) had to be adjusted, then he scanned the area, and the Roku has to be set as low priority.. Then had to Lower Windows Audio format and Discord audio to lower quality… AND STILL… Using more then 2 of these at a time, Messes up the Modem, it over heats(no fricking reason) and shuts down to reset..
(In vermont, after a major Vote changed things for the better, and still nothing is being DONE)

restless94110 (profile) says:


Netflix subscriber losses are a direct result of its abhorrent Social Justice Worker content and wokeness.

I recently took a 30-day free trial after a several year absense and right away the AI put me completely off. But then all the NetFlix imprinted new stuff made me wary.

After reading an interview of the writer/creator of Damnation a Netflix series, I decided to try it.

I quickly found that in 1931 in the Midwest all women knew better than all men, nanny granny whorehouse madams forced middle aged men to drop trou for her personal examination (along with throwing whiskey on her client’s privates), and that only black prostitutes can read (white prostitutes cannot).
And all black prostitutes in Iowa in 1931 look like Beyonce. And have snarky attitudes that include screaming c***** at the top of their lungs to a white client who had just murdered a person.

It was 12 minutes into the episode.

This is why subscribers are leaving Netflix.

Anonymous Coward says:

Yo Ho Ho

"That’s not only going to create greater losses due to competition, but the added cost and confusion of so many exclusivity silos is going to likely drive a significant number of users back to piracy, something the streaming sector hasn’t really figured out yet. "

Disney, AT&T, Comcast, Netflix, et al., and their proliferation of increasingly expensive media silos, predominantly full of middling or low quality content, is among the best motives to pay $2.99 monthly for VPN services, a great, big, external hard drive, and lots of download bandwidth.

ECA (profile) says:

Competition is 1 thing

After all this time,
Many corps are figuring out that Somethings WORK..
All these corps after TRYING many times are starting to get the idea of what it takes.
Look for Locations popping up, that are For them ALONE..

They are NOW holding onto their OWN, and not leasing them to Hulu, red box, Vudu, netflix. and ROKU..
They are going to LOCK DOWN, all their CP, IP, and everything they OWN.. they have Finally created what they needed to do it.
Even if it fails.. as SYFY, found out many times, after 1,000,000 people hit their servers to watch the shows..

The STUPID part of this..
Is what Cable charges, over what these other entities are going to charge for the services.
$10 here, there and everywhere?? will be MORE then the cost of cable, for allot less.
Sites that have many Shows from Many of the corps are going to loose access.
Its all going to be Internet restricted to ONLY that sites access…

Viva le pirates..

Anonymous Coward says:

Netflix has destroyed Blockbuster, cable, broadcast and a big chunk of the theatrical movie industry outside Disney blockbusters, and replaced it with something that is far harder to make a buck in. Its subscribers are price sensitive, find ads toxic, are quick to churn, and demand a large supply of continually refreshed content that satisfies their idiosyncratic tastes. Tough business.

But it will be just as tough or worse for competitors. Disney will do well but HBO Max is priced too high, Apple+ has a scattershot and skimpy content strategy, and Comcast is going to foist ads on us. CBS has Star Trek and The Good Wife, but all their merger-mania won’t bring them up to the level they need to be at. And then there’s always Amazon. Good luck finding anything in that mess.

People are not going back to broadcast and cable, and they aren’t going to turn off their gizmos and go play in the sun, so somebody is going to profit from this, and Netflix is still in the best position since they made this mess to begin with. Disney and Amazon will probably do well too. The rest? Hmm.

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