For the very first time in its short but fruitful history, Netflix posted a loss in subscribers in a quarter, at least in the United States. This week, in a letter to shareholders, the streaming giant confirmed its first quarterly subscriber loss, as 130,000 domestic accounts were terminated during Q2 this year. Netflix stock quickly took a hit following the news.
In addition to the loss of subscribers in the domestic market, the international Netflix growth wasn't nearly as high as the company expected. The company added a net total of 2.7 million subscribers around the globe in Q2, per Variety, including 2.83 million internationally. Previously, Netflix had added 5 million subscribers in a quarter, including 4.7 million internationally and 300,000 domestically.
In the letter to shareholders, Netflix put the blame of the loss solely on its weaker content slate in Q2, which concluded before the release of Stranger Things 3 on July 4th.
“Our missed forecast was across all regions, but slightly more so in regions with price increases,” the company said, “believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions (while our over-forecast was in every region). Rather, we think Q2’s content slate drove less growth in paid net adds than we anticipated. Additionally, Q1 was so large for us (9.6m net adds), there may have been more pull-forward effect than we realized. In prior quarters with over-forecasts, we’ve found that the underlying long-term growth was not affected and staying focused on the fundamentals of our business served us well.”
Despite the losses in Q2, Netflix is expecting a major resurgence in Q3, saying it plans to add 7 million paid memberships this time around. That's substantially higher than the 6.1 million that were added in Q3 last year.
It's a lofty goal, but it will likely be bolstered by the two most popular shows on the entire Netflix slate. July began with the release of the highly-anticipated third season of Stranger Things and will end with the final season of Orange is the New Black.