Thursday, August 18, 2022
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Despite Series of Pandemic Wins, Netflix Faces a Rocky Future

Netflix’s membership base surged to 222 million last year, but the streaming service has a difficult path ahead as the pandemic’s surge in interest fades.

Last year, Netflix attracted 18.2 million new subscribers, about half of the amount who signed up in 2020.

Investors had thought that the speed of the economy would begin to pick up again.

However, the company’s 2022 prediction was disappointing, sending shares down almost 20% in after-hours trading.

In the three months leading up to March, the company said it anticipated to recruit only 2.5 million new members, significantly less than experts had predicted.

“Acquisition growth has not yet re-accelerated to pre-Covid levels,” Netflix stated, citing “Covid overhang and macro-economic difficulties” in sections of the world including Latin America.

Netflix, which attracted 8.3 million new customers in the last three months of 2021, believes there is still opportunity for growth as more people abandon traditional television.

However, it acknowledged that increased competition from Disney, Apple, Amazon, and HBO was beginning to have an influence.

“Consumers have always had numerous options when it comes to their entertainment time – competition that has only heightened over the last 24 months as entertainment firms all over the world establish their own streaming offering,” according to the firm.

“While the increased competition may have slowed our marginal growth, we continue to expand in every area and region where these new streaming options have emerged.”

To keep users interested, Netflix spends billions of dollars on programming. A new season of The Witcher fantasy television series and the farce Don’t Look Up – which has already become the company’s second most popular picture ever – were both hits in the last three months of the year.

However, the company, which recently hiked pricing in the United States and Canada, is experiencing growing expenses and other issues, including a $1 billion loss due to the strengthening of the currency, according to the company.

“When it comes to subscriber estimates – the most significant statistic for streaming services,” Laura Hoy, an equities analyst at Hargreaves Lansdown, said, “Squid Games creator Netflix has gone from a fairytale to some uncomfortable watching.”

“For the present time, the group’s prediction for new subscribers came in at little over half of last year’s amount,” she added. “While management blamed a back-loaded content calendar that would see several major releases at the end of the quarter, investors were obviously alarmed by the reduced growth outlook.”

When compared to the same time a year ago, revenue climbed by 16 percent to $7.7 billion in October, November, and December. Quarterly earnings grew by 12% to $607 million.

Profits increased by 19 percent to $5.1 billion for the year, while sales increased by 19 percent to $26.7 billion.

Bob Carlson
Bob Carlson
Bob Carlson is a business journalist, with over a decade of experience in the trenches of reporting up-to-date business news for publications all over the world. With a wealth of knowledge at his back, Bob strives to bring the most important insights into the business world for TheOptic daily.
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