Netflix is feeling the heat from ferocious subscription streaming competition as it warns that customer growth will slump dramatically in the first quarter of 2022.
The admission that a golden age of rampant growth is coming to an end sent the share price of the former darling of the NASDAQ down by as much as 20% at one point as investors digest the new reality of only modest growth.
Industry watchers had expected Netflix to add around 4m subscriptions over the January to March period, equalling its achievement in the first quarter of 2021, but Netflix set a cat amongst the pigeons by conceding it would fall well short of this number in the face of ‘intense’ competition from the likes of Amazon Prime, Disney+ and HBO Max.
Appraising shareholders of the situation in a letter, Netflix wrote: “While this added competition may be affecting our marginal growth some, we continue to grow in every country and region in which these new streaming alternatives have launched.
“This reinforces our view that the greatest opportunity in entertainment is the transition from linear to streaming and that with under 10% of total TV screen time in the US, our biggest market, Netflix has tremendous room for growth if we can continue to improve our service.”
Compounding Netflix’s travails is growing confidence that 2022 will be the year that pre-pandemic life finally returns, heaping pressure on so-called ‘stay-at-home’ stocks such as Zoom and Peloton, which have benefitted from changing consumer patterns.