Netflix is losing subs in the US. This could be bad news for streaming.

Netflix lost 400k subscribers in North America last quarter. Combined with a slowdown in Disney+ subscriber growth, this could be bad news for the industry.

July 22, 2021

The popular saying goes, “Netflix and chill” (we choose not to explain what this means).

We may have to update it to “Netflix and be slightly concerned” after the company’s latest quarterly earnings report.

Netflix added 4m subscribers…

… in Q1 2021, bringing its total to 209m, per The Hollywood Reporter.

However, all of the net new users came from outside of North America (US and Canada subscriber count declined by 400k).

This is concerning because the average revenue per user (ARPU) — a key metric — is much higher in North America ($14.54) than in the faster-growing Latin America and Asia-Pacific regions (<$10).

Pandemic to blame?

Netflix’s CFO says COVID created “choppiness in the business trends.” In Q1 of 2020, Netflix added a whopping ~16m subs as shelter-in-place orders swept the world.

With all those chillers pulled forward (AKA customers who may have otherwise waited to subscribe) a future slowdown in growth was anticipated, according to Netflix.

The dip isn’t dissuading the company: Netflix spent $8B in the 1st half of 2021 and confirmed rumors that it will launch a gaming service (at no extra cost), per CNBC.

A slowdown could be bad elsewhere

The Information previously reported that Disney+ has seen essentially 0 subscriber growth in North America this year. The lull is likely due to a $1 price increase in March (to $7.99/month).

Disney+ still has ~110m subs, though. Other streamers — HBO Max, NBC’s Peacock, Apple TV+, Discovery+, and the soon-to-come CNN+ — look expendable if people are getting tired of too much streaming.

Maybe the new phrase is, “Netflix and… Disney+ or Amazon Prime Video, but def not Peacock.”

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