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    Tuning out: Netflix plot-twist, explained

    Tuning out: Netflix plot-twist, explained

    Tuning out: Netflix plot-twist, explained
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    By Yashi Gupta   IST (Updated)


    Netflix's management had hinted at this slowdown with their repeated comments that its gains were a "pandemic-drive anomaly."

    Netflix Inc fell short of street projections for new customers in the first quarter of 2021. The streaming giant reported 3.98 million new subscribers from January through March, much lower than what its management and analysts estimated. Refinitiv projected an increase of over 6.25 million subscribers.
    "It's just a little wobbly right now," Reed Hastings, chairman told the press.
    Netflix forecasted just 1 million new streaming customers in the second quarter when analysts expected nearly 4.8 million. This marks a huge comedown for the streaming giant. Netflix has reported its smallest gain during these three months in nearly four years.
    Last year, during this time, Netflix added 16 million subscribers as countries went into lockdown, resulting in audiences waiting to binge-watch, ready to be swept off their feet. 
    But the picture has now changed. A year later, Netflix is falling short of street expectations. Why? Let's take a look.
    Reopening economies
    Netflix's growth in subscribers was mainly boosted by countries across the world going into lockdown. But now as economies open up, following the massive vaccination programs, people are venturing out of their homes more. 
    Netflix's management had hinted at this slowdown with their repeated comments that its gains were a "pandemic-drive anomaly."
    Now as people venture out of their homes, their spending habits are changing slightly. In a letter to shareholders, Netflix said the growth in subscribers slowed down due to the "big COVID-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to COVID-19 production delays." 
    During lockdowns, audiences spent their time streaming more than they did pre-pandemic. In April, the number of people streaming was nearly 75 percent higher than the previous year.
    Netflix fatigue
    Netflix's quarterly numbers point to a slowly developing 'Netflix fatigue' among viewers after a year of binge-watching. There is so much one can watch. Netflix binge-watchers, people who watch shows back-to-back, have too much on their plate now -- too many streaming services and too many choices.
    Production delays
    The streaming service had garnered epic success with exclusives like "The Queen's Gambit" and "The Crown". But as the pandemic progresses, production houses are struggling to complete shows. Some of these billion-dollar shows were ordered to maintain dominance in the industry, but pandemic had other plans and production, marketing had to be put on hold.
    Stronger competition
    Some analysts slate the reason for decreasing numbers to a slew of stronger competition. They believe Netflix will need fresh and intriguing content along with a creative approach to pricing as it faces stronger, better competition.
    "We are not enthralled with the appeal of the content that Netflix is producing off a high teen billion programming budget,: benchmark analysts Matthew Harrigan told Reuters. "The 2H21 content slate certainly improves from 1H, but we do not think that is especially compelling relative to 'The Crown' and 'Bridgerton' in 2H20."
    Despite the crowding in the streaming industry, Netflix believes its rivals did not play a part in them missing estimates. It expects the subscriber growth to surge in the second half of 2021 when shows like 'The Witcher' and 'You' return with fresh episodes.
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