by Thinus Ferreira
Netflix's growth finally went "wobbly" in the words of its co-CEO in the first quarter of 2021, with the video streaming service that posted a much smallest growth number for a quarter than even itself expected, but promising the release of new content like new seasons of The Witcher, You and Cobra Kai in the fourth quarter of this year as part of a steadier new content slate.
Netflix also said that it will start to test and rollout its crackdown on so-called "password sharing" but that it won't be done in a way to alienate users.
After reporting record growth in 2020 that it attributed to the Covid pandemic and people staying at home, Netflix blamed Covid for its slowed-down numbers when it reported its Q1 numbers late on Tuesday night.
Netflix added 3.98 million subscribers in Q1, a few million short of its own forecast of 6 million and had 207.4 million paying subscribers by the end of March 2021 - an increase of 13.6%.
Of the 3.98 million new subscriber additions, 1.81 million customers came from the Europe, Middle East and Africa (EMEA) region, making it Netflix's fastest-growing region, with Asia in second place.
Netflix has been warning for some time that its growth numbers will start to slow after record growth in 2020 and also tempered expectations for Q2, saying that it expects even smaller growth and might add just 1 million new paying subscribers.
Netflix's 3.98 million new subscribers during this years's first-quarter pales in comparison to its enormous 15.8 million new subscribers that it added during the same time a year ago.
"We had those 10 years where we were growing smooth as silk," Reed Hastings, Netflix's executive chairman and co-CEO, said in Netflix's quarterly investors webcast. "It’s a little wobbly right now."
Netflix said that it attributes the smaller subscriber growth to a "2020 pull forward" - meaning that it added subscribers that it would have added in 2021 in 2020 already because of Covid, as well as to a lack of new content - also because of Covid.
Netflix said that it expects to spend more than $17 billion in 2021 on churning out new content to keep subscribers hooked - up from $11.8 billion in 2020 - and that several shows that had to stop production because of Covid, resumed production.
"We believe paid membership growth slowed due to the big Covid-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to Covid-19 production delays," Netflix said.
Ted Sarandos, Netflix co-CEO and chief content officer, said during the webcast that the second half of 2021 will see a "much steadier" rollout of content again.
"What happened in the first part of this year was that a lot of the projects that we’d hoped to come out earlier did get pushed because of the post-production delays and Covid delays."
"We think we'll get back to a much steadier state in the back half of the year - certainly in Q4 where we have the returning seasons of some of our most popular shows like The Witcher and You and Cobra Kai as well as some big tentpole movies that came to market a little slower than we'd hoped like Red Notice and Escape From Spiderhead."
About its planned global crackdown on the practice of so-called "password sharing" whereby legitimate subscribers give their login and password details to friends and family members who are not paying subscribers, Reed Hastings said that Netflix will be careful not to alienate users.
"We'll test many things, but we would never roll out something that feels like turning the screws on people who enjoy the service. It's got to feel like it makes sense to consumers; that they understand."
