Netflix: Streamer Stumbles

Netflix Inc. said subscriber growth for the first quarter was weaker than expected, a potential warning sign for the company as consumers in many countries start to emerge from pandemic-related lockdowns and as streaming competition increases.

The Wall Street Journal reports the company on Tuesday said it added another four million subscribers on a net basis globally between January and March, fewer than its forecast of six million.

“It’s just a little wobbly right now,” Netflix Chairman and Co-Chief Executive Reed Hastings said on the company’s video call to discuss results.

The subscriber gain in the first quarter was far below the 15.8 million increase from a year earlier, when the spread of the coronavirus was first intensifying and people were homebound and bingeing on content.

Many consumers who get vaccinated are venturing out of their homes more and shifting spending despite the lingering threat posed by coronavirus. Airlines are looking for a resurgence in summer travel. Movie theaters and other venues have reopened in New York, Los Angeles and elsewhere. Restaurants and hotels, both hard hit by pandemic-related closures and restrictions, have stepped up hiring.

The company’s lower-than-expected growth comes as it faces its greatest competitive threats. Walt Disney Co.’s Disney+, which launched just about a year and a half ago, already has 100 million subscribers world-wide. Other rivals including AT&T Inc.’s HBO Max, Apple Inc.’s Apple TV+ and Amazon.com Inc.’s Prime Video are spending heavily for content, driving up programming costs.

Netflix said it expects subscriber growth to pick up in the second half of the year, when some of its more successful shows return with fresh episodes, including “The Witcher” and “You.” Netflix projected it will spend more than $17 billion on content this year.

In recent weeks, Netflix has also made moves to shore up its content through acquisitions and licensing deals. It struck a five-year deal valued at well over $1 billion with Sony Pictures Entertainment for streaming rights to the studio’s theatrical releases starting in 2022. It also spent $440 million for the rights to make two sequels to the film “Knives Out” starring Daniel Craig.

As part of the Sony pact, the two companies will also create original content for the streaming service.