The last time Netflix lost subscribers in the United States, it was 2011, and the company was embroiled in a controversy over a price hike and an abortive plan to spin off its disc-rental service into a brand named Qwikster. That was also the last time Netflix seemed vulnerable, at the dawn of the streaming era, when more of its revenue started to come from online viewing rather than DVDs sent by mail. Qwikster was quickly (qwikly?) dropped, but the damage was done, with Netflix losing some 800,000 subscribers and almost half its stock value. Since then, numbers have only trended upward for the company—until now.
For the second quarter of 2019, Netflix had forecast a gain of 300,000 accounts in the United States, a modest uptick in its 151 million global subscriber base. Instead, it lost roughly 100,000 in America and gained only 2.7 million around the world (it had predicted a total growth of 5 million). The company’s stock fell 10 percent as a result, perhaps not only because of the missed prediction, but also because of the indication that the service may have finally found its ceiling, even as it continues to spend wildly on new TV and movies.
Netflix doesn’t think this is the beginning of a trend, blaming the soft numbers on price increases, a lack of must-see programming, and the fact that its first-quarter growth had been so strong that fewer new viewers were available, what it dubbed a “pull-forward” effect. “We expect … to return to more typical growth in Q3,” the company said in a letter to shareholders, pointing out that popular programs such as Stranger Things, The Crown, and Orange Is the New Black were debuting in the latter half of 2019, along with Martin Scorsese’s film The Irishman. If numbers tick up in the next report, this will be seen as little more than a blip.