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Video Streaming Giant Netflix Experiences Biggest Hiccup since its Earliest Days

5 years ago

Netflix seemed like an unstoppable juggernaut around a year ago as the online streaming giant continued to gather new subscribers in the United States and the rest of the world. The stock price continued to climb as well as its slew of original shows attracted new customers to the platform. However, the company’s eagerly anticipated earnings report for the 2nd quarter dropped a bombshell of sorts on investors as it reported a drop in the number of customers in the United States and the subscriber growth in other territories remained muted as well. The company reported that it had lost a staggering 130,000 customers in the United States along. The reason behind the drop is being attributed to the rise in subscription prices and an underwhelming line up of shows during the period.

On the international front, the company added 2.8 million subscribers, and while that is a commendable performance, it needs to be pointed out that the figure is half of Netflix’s earlier projections. Needless to say, the updates took a heavy toll on the stock as well as it nosedived by as much as 13% and hit $314 a share. In this regard, it is also important to point out that up until the point the company remained a monopoly of sorts, it enjoyed significant growth. However, the entrance of well-capitalized companies like Disney into the online streaming space and rising competition seems to have taken a toll on the company. Analyst Eric Haggstrom of EMarketer Inc said as much. He said, “Netflix has a difficult road ahead, with looming competition and the removal of popular content.”

It is important to point out that this is the company’s worst show since it had separated its DVD mail-order business from its streaming service. That being said, the company insists that it is only a minor hiccup for the company and also pointed out that the second quarter has generally been an underwhelming one. Chief Executive Officer of Netflix, Reed Hastings said, “Our position is excellent. We’re building amazing capacity for content. Our product has never been in better shape.”