Netflix Fails To Hit Subscriber Growth Goals, As Company Denies That Ads Are Coming

Netflix missed.

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Streaming giant Netflix announced earnings results for its Fiscal 19 Q2 today, and as part of that, the company confirmed a massive miss for subscribers, addressed the forthcoming removal of The Office and Friends, and also reiterated that the streamer will not introduce ads.

Starting with the subscriber numbers, Netflix announced that it added 2.7 million paid subscribers during the quarter. That's down from 5.5 million new subscribers during the same period last year. It's also far below the 5 million new subscribers that Netflix forecast for Fiscal 19 Q2.

Looking ahead, Netflix said it expects to add 7 million paid memberships in the current fiscal quarter, which would be ahead of the 6.1 million new paying members that Netflix added in Fiscal Q3 2018. The release of Stranger Things Season 3 on July 4 (during Netflix's Fiscal 19 Q3) is surely baked into that ambitious subscriber growth forecast.

Despite the huge subscriber miss for the latest quarter, Netflix maintains that consumers globally continue to be eager to "move from linear television to internet entertainment at a remarkable rate."

Netflix missed its subscriber growth targets across "all regions," the company said, though it was "slightly more" in parts of the world where subscription prices went up. Competition was not a factor in the subscription increase miss, Netflix said, explaining that there wasn't a "material change" in the competitive landscape during the quarter.

Netflix had a lot of new releases during Q2, including Dead to Me Season 1, which Netflix says was seen by 30 million households over its first four days. Netflix has renewed Dead to Me for a Season 2. Also during Q2, Netflix launched When They See Us, a limited series based on the real-world Central Park Five case. Netflix says 25 million homes worldwide watched the show in its first four weeks.

The new David Attenborough nature show, Our Planet, also premiered during Fiscal 19 Q2, and it became Netflix's most-watched "docu-series" over its first four weeks, reaching 33 million homes. In terms of movies, some of Netflix's Fiscal 19 Q2 releases included the Adam Sandler movie Murder Mystery, which is the most successful of Sandler's Netflix movies to date with 73 million households watching it in its first four weeks. Other popular new movie releases on Netflix in the quarter included The Perfect Date (48 million homes over its first four weeks) and Always Be My Maybe (32 million household views in first four weeks).

A "view" according to Netflix is when an account watches 70 percent of an episode of a show or 70 percent of a movie.

Also in the earnings report, Netflix addressed the fact that it is losing two of its most-watched shows: The Office and Friends. Netflix spun the news by saying losing those shows is good because it "[frees] up budget for more original content." The shows would have been expensive to keep, as it was reported that The Office went to NBC's new streaming service for a reported $100 million per year over five years.

Netflix also spoke broadly about the wave of competition coming its way in the next year, with companies like Disney, Apple, WarnerMedia, and NBCU planning to join Netflix (and others) in the video-streaming market. "The competition for winning consumers’ relaxation time is fierce for all companies and great for consumers. The innovation of streaming services is also drawing consumers to shift more and more from linear television to streaming entertainment," Netflix said.

Netflix said it still has a lot of room to grow because currently in the United States, which is Netflix's "most developed market," the company only commands roughly 10 percent of the time people spend watching TV. The percentage is lower for streaming on mobile, Netflix said.

The company added that it will differentiate itself from some of the newcomers in that it has no plans to introduce ads. "That remains a deep part of our brand proposition; when you read speculation that we are moving into selling advertising, be confident that this is false," Netflix said. "We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction."

You can read Netflix's full earnings report here.

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Avatar image for monkyby87
monkyby87

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They’ve kind of killed themselves. They’ve become so big that everyone is starting a service, and taking their content with them. Netflix now has only their originals shows and movies, and most of those are bad.

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tlpina

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Netflix is a big pool of teenage driven and mostly empty stories, bad comedies and terribly produced films.

Like any other content provider, every now and then, something good comes out. To me, that's the case of Stranger Things and Beasts of No Nation, but mostly, it is crap like Russian Doll, You get me etc.

Not to mention the kids shows, that are so terrible, my son has uninstalled netflix from his tablet. They managed to take Captain Underpants which was a fantastically fun movie to watch and turned it into the worst tv series I've seen since Jem and the Holograms.

Having said that, Netflix's biggest problem is the stock market. They are hugely profitable, but it won't matter if they miss the mark promised to the share holders. They are so big now, that the smartest move would be to transition to privately owned over time.

Do what Best Buy did and become independent from the greed that drives companies to the ground.

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BDRTFM

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Edited By BDRTFM

Netflix has turned to crap. I barely watch it anymore because there's nothing to watch. Let's see what's trending; Friends and the Fresh Prince of Bel Air. Two 30-year-old sitcoms that weren't very good when they first came out let alone 3 decades later. If they start showing so much as one ad per show it's cancel time. Everybody is pulling their content so the only thing they have left are documentaries, ancient sitcoms and Netflix Originals which are usually pretty bad. The few movies they do have they don't get until months after Blu-Ray release. How the mighty have fallen... Everybody says we need to cut the cable but now we have to buy subscriptions for every freaking broadcasting company out there and put up with ads. How is that better than cable? Sounds like the same thing to me. Instead of buying cable packages we are buying subscriptions. The only difference is the name for the product we are buying.

/r

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gargungulunk

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I wouldn't worry about growth, worry about keeping those that have already shown up

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attirex

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Edited By attirex

Need to expand their market--Pornflix?

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Atzenkiller

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Sounds tough, that a company that is already the biggest in its field couldn't grow even further. They'll probably shut down soon because not having limitless growth is just not profitable.

And who the **** would pay money for a service that then forces them to watch ads? I mean seriously, that's ridiculous. You can alredy get most things for free online as long as you're willing to put up with ads, or use a blocker for them.

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BarcaAzul

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@Atzenkiller:

Yeah I'm not paying and having ads

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OldDadGamer

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OldDadGamer  Moderator

@Atzenkiller: On the paying money to watch ads thing, it's just more proof that we're coming full circle and back to cable TV. Pretty soon, instead of paying fifty bucks to one company to watch all of our shows (with commercials) we'll pay ten bucks to five different companies to watch all of our shows (with commercials).

It's all come full circle.

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Atzenkiller

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@olddadgamer: It's unavoidable as long as people are willing to put up with everything. So far Netflix and co. had to make their service more attractive than cable tv. Now they don't need to anymore, so there's no reason to not start showing some ads. And then it gets more and more and people will just accept it, just as they're already accepting it everywhere else. After all people like to talk big about how they could just switch to a different service. But in reality most would rather put up with something that they're not really happy with than to make such a big change. And since changes usually happen very slowly they won't even notice how much they've compromised until it's too late.

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monkyby87

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@olddadgamer: I had said something similar when everyone started making their own streaming service. It definitely seems to be going that way.

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OldDadGamer

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OldDadGamer  Moderator

@monkyby87: Sure does.

The supreme irony is that I can watch netflix, amazon and hulu......through my cable box. And, if I had HBO, I could watch all that on demand.

The more things change, the more they stay the same.

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Sorrow_316

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Personally I’ve moved on to Hulu.

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JustTheTip

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Netflix is in trouble. Their original content is 95% crap. Originals are the only way Netflix can survive, but there’s nothing good enough to get people to sign up. Once Disney+ goes live, they’re gonna be taking the majority of their stuff off of Netflix. Don’t forget, Disney owns Fox now. So, that stuff will be coming off and likely going to Hulu.

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jenovaschilld

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Edited By jenovaschilld

I've had netlflix sub since 98' when I had a few DVDs coming to the house every few days. I could not see how they could stay in business with that model even then. 2008' with some streaming, I thought there is no way this could last or stay feasible. So it has been two decades later and me and my family still watch Netflix. My wife is addicted to DIY shows and Korean dramas, me and the kids about everything else. And I pay $16 dollars a month for Netflix premium -which allows many screens and 4k resolution. This is also the same price I bought lunch for 2 of us earlier today. And simply I get my moneys worth. If i didn't I would drop netflix as easily as changing peanut butter brands even after 2 decades.

Netflix to me is still a very damn good value for the shear amount of hours we watch tv on it. I still have traditional cable with less and less reasons to keep it every year. Even the wonderful on demand features still have commercials and do not allow for fast forwarding. I also have Amazon prime - which i love also, Hulu basic - which is lacking to me. That is around $34 a month on streaming services which we watch way more then our Spectrum cable service that I would have dropped long ago if not for my 64 yr old sister who cannot cut the cord.

So that is a 180$ cable +internet bill, and a $34 streaming service bill. Probably no one here remembers when cable companies went crazy with pricing in the early 90's and late 90's where bills went from 75$ to $200 in just a few years as there were too little competition and too few who controlled it all. WE are living in a golden age of television in that the content is amazing and access to varied content is even cheaper and easier then ever before. This current and upcoming streaming war is a good thing, it suppresses prices as well as improves overall services - I just fear that if there is only a few that finally control all of streaming - that prices will rise and quality will go down.

And when the dust settles I have finally learned not to count Netflix out.

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Sorrow_316

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@jenovaschilld: if your sister can’t cut the cord, she should foot the bill.

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SinisterSlay

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I mostly watch Crave now. Netflix never seems to have anything good.

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mynameisjake16

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im about to drop too. Every time i log, the majority of content under "newly added" is international b-list, crappy production, non-english speaking films. If this is the content they hope will fill the office void ... i think netflix is in more trouble than it realizes.

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eli150

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Edited By eli150

Too many streaming services. With everyone claiming their content we probably wont have one or even two services that covers all the content we want to watch

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idakooz

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Disney's streaming service will most definitely hurt Netflix as well as other upcoming streaming services.

The fact that Netflix put an ass dump on users using VPN, increasing their fees, and putting out so many mediocre Netflix originals probably has something to do with it. Netflix needs to stop milking their franchises. Stranger Things 3 was meh but you know a part 4 is coming.

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Sorrow_316

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@idakooz: I have no problems with my VPN service on Netflix.

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kstaggs87

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Edited By kstaggs87

They say no ads now....just watch...but as soon as I see one ad, that’s when I’m out.

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consoleclassix

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@kstaggs87: We can able to block ad website and IP address in our router to stop ads running. That is way clever for us to block ads in our router. We must use computer to log in Netflix if have ads in background. Ghostery, Ad Block Plus, uBlock Origin add on for Google Chrome, Firefox, etc can able to detect ads info then we can block them. Also other software like IP address monitor will catch ads income toward to our internet that show up and block them.

All ads are illegal means steal our info and personal should must banned forever to make internet free of ads to keep people happy. Netflix company should learn own big mistake lessons and need to grow up. :-)

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jyml8582

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Edited By jyml8582

Netflix original shows are mostly okay, a few of them are pretty good but most are just okay.

Netflix original movies, on the other hand, are mostly garbage. There's maybe one or two that are watchable, but the vast majority of their original movies are just plain bad.

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untouchables111

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Edited By untouchables111

yeah when Disney + drops...so does my netflix sub... been subed to this service sine it began.. their content pool is fading. lots of options but nothing i wanna see. add back in 80s and 90s movies and each week add in a AAA movie title even if its only offered for the week. to many solution but all i see if their first party titles and though some are ok..... it not worth keeping the sub going

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siarhei

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They need more family friendly shows imo.

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