Netflix added only 2.2m subscribers in the third quarter, as the streaming service’s boost from pandemic lockdown life faded.
This was a much slower showing than the 16m and 10m subscribers Netflix added in the first and second quarters, respectively.
The company further warned that “as the world hopefully recovers in 2021”, subscriber additions were “likely to be down” in the first half of next year, compared with 2020.
Wall Street analysts had anticipated Netflix’s growth spurt to slow in the months of July, August and September as lockdown restrictions eased and some live sports returned. They also raised concerns that blowback over Cuties, a Netflix original film that some conservative politicians censured as “child pornography”, could prompt some customers to cancel their subscriptions.
Netflix shares slipped more than 5 per cent in after-hours trade, as the tepid results missed analyst forecasts for 3.6m new subscribers — and Netflix’s own guidance for 2.5m.
The group’s shares have soared more than 60 per cent this year, as the pandemic and stay-at-home era helped power its fastest subscriber additions ever.
Analysts said the shutdown of cinemas and dearth of new television shows or live sports have pushed audiences further towards streaming as their main source of at-home entertainment. Netflix told shareholders on Tuesday that its “need for external financing is diminishing” and that it does not plan to tap debt markets this year.
Revenues in the quarter ending in September jumped 23 per cent from the same period last year to $6.4bn, just above analysts’ forecasts. Net income rose to $790m, from $665m a year ago.