Netflix has been one of the biggest disappointments for investors in the last week after revealing it has lost US subscribers for the first time in eight years.
In its earnings report released on Wednesday, the global streaming giant said it had lost 130,000 US customers, despite adding 2.83 million new paid streaming subscribers outside the US.
The company’s stock swiftly tumbled 13% on the news, with even the overseas new accounts being below analyst forecasts as price increases in some countries caused some customers to drop off.
This is the first time the company has suffered a loss of domestic subscribers since it began spending billions of dollars making its own original content and is a harsh blow to the platform’s business model.
The fewer quarterly subscribers than expected appeared to relate to programming failing to draw new viewers with fresh competition on the horizon.
New competition could be a substantial headwind for Netflix, which is losing shows to some of the new players and could see customers trying the new arrivals as well.
First up is the threat of streaming service Disney+, which is due to launch in November with a substantial amount of original content.
In addition, Apple, AT&T and Comcast all have plans to start streaming next year with two of Netflix’s most streamed series moving over to the new platforms.
In June, Comcast announced it had snatched back the streaming rights to The Office in a $500 million deal starting from January 2021.
Comcast’s NBCUniversal produced the US comedy, starring Steve Carrell, up to its ninth and final season in 2013 before licencing reruns to Netflix.
It has been the number one show on the streaming platform for several years and in 2018, it accounted for 52 billion viewing minutes on Netflix.
Meanwhile, sitcom hit Friends will leave Netflix at the start of 2020 and move to the AT&T service HBO Max.
However, Netflix chief content officer Ted Sarandos told reporters that the its customers just needed to adjust to the idea of Netflix being a source of original content.
“By making these early investments in original programming, [we’re] getting our consumers … much more attuned to the expectation that we’re going to create their next favourite show, not that we’re going to be the place where you can get anything every time,” he said in an interview.
Despite the disappointing subscription figures, Netflix still posted a 26% increase in revenue for the second quarter to almost US$5 billion.