Netflix Adds Fewer-Than-Expected Subscribers In 2Q

For the first time in nearly a decade, the number of people subscribing to Netflix Inc. in the U.S. declined, an underwhelming performance for the streaming giant that comes as a slew of rivals are about to enter the field.

The Wall Street Journal reports the Los Gatos, Calif.-based company said it had 130,000 fewer domestic subscribers at the end of the second quarter compared with the end of the first, sending Netflix shares sliding more than 11% in after-hours trading Wednesday. The stock is still up by double digits for the year.

Globally, Netflix added 2.7 million subscribers in the quarter, far fewer than the 5 million it had forecast and below the 5.5 million it added in the second quarter of 2018.

The slowdown in growth comes as rival streaming services from Walt Disney Co. , Apple Inc., AT&T Inc. ’s WarnerMedia and Comcast Corp. ’s NBCUniversal prepare to enter the marketplace in the coming months, setting off what Wall Street analysts are calling “the streaming wars.”

As a result, rivals are starting to take away their content from Netflix, including the streaming service’s two most-watched shows: “The Office” and “Friends.” Reruns of the former will move to a new streaming service being launched by NBCUniversal starting in 2021, while “Friends” will leave Netflix at the end of this year and become available on WarnerMedia’s new direct-to-consumer service, HBO Max, which will launch widely in the spring.

Netflix played down the coming loss of two of its most popular shows, telling shareholders it will allow for more spending on original offerings. Even its biggest titles, the company said, account for “only a low, single-digit percentage of streaming hours.” When programs leave Netflix, “our members shift over to enjoying our other great content,” the company said.

The last time Netflix faced quarter-to-quarter subscriber declines in the U.S. was in 2011, after it launched an ill-fated new pricing model that was roundly rejected by subscribers and quickly scrapped.

Netflix remains the dominant streaming platform here and abroad with 60.1 million U.S. subscribers and 91.5 million internationally. But the 151.6 million global total fell short of the company’s forecast of 153.9 million and the 156.5 million analysts polled by FactSet had expected for the period.