Netflix Investing In Originals Amidst Second-Quarter Loss

Netflix reported a tremendous loss in its subscriber growth based on the latest second-quarter report of the year, which price increase, the brewing streaming wars, and lulling content all contributed to the streaming company’s plummet. However, Netflix can’t do anything about the first two problems; hence, it’s putting more money in its original content instead.

According to the quarterly report, Netflix lost 130,000 subscribers from the United States—a first for the streaming platform since 2011. Furthermore, only 2.7 million paying customers globally were added in the second quarter, which is not a small number but falls way behind the projected 5 million users.

Netflix stocks dropped by more than 10 percent before the market closed on the day the report came out—equating to around a $17 billion loss from its market value, analysts say.

Notably, the subscriber count loss can mainly be attributed to the price increase the streaming giant implement — an increase from $1 to $2 — which was announced at the start of the year that went into effect a few months after.

The platform is also looking at an imminently decreasing range of content that it can offer to its loyal subscribers, as the streaming wars begin to bleed Netflix dry and consequently, its subscribers in the process.

Specifically, the streaming giant is facing a large problem in its home country due to the looming oversaturation of streaming sites that will soon be available for all US citizens.

WarnerMedia, Disney, and Apple are all launching their own streaming services within the next few years, and they’re bringing their original content with them and taking them out of Netflix.

In recent reports, Netflix will soon be losing several heavily watched licensed series including fan favorites, and most watch TV series Friends and The Office to competitors WarnerMedia and NBC Universal respectively.

In perspective, Disney+ will be involving Hulu and ESPN in its list of available services on top of successful production houses such as Disney, Star Wars, and Marvel for the general price of only $6.99 a month. Netflix’s basic plan is currently at $9.

Meanwhile, WarnerMedia is also launching HBO Max that will certainly feature pop culture icons such as Game of Thrones.

If more than anything, both products could easily persuade US customers in subscribing to their service and away from Netflix.

As of the moment, Netflix has over 60 million paying subscribers in the United States, and the company is confident that it can get that number climb up to 90 million.

However, with the streaming wars looming, Netflix is not taking any chances and are already looking at solutions. Primarily, the streaming giant is looking to get more original content on its platform.

Now, there are permanent studio sets that have been purchased for Netflix to produce films and TV shows faster. It is also putting lots of money behind US shows and movies, signing hundred-million-dollar deals with high-profile showrunners like Shonda Rhimes and Ryan Murphy.

Based on recent reports, the effort is paying off as Netflix continues to break records with its original movies and TV shows. One, in particular, was the recently released Murder Mystery movie that featured the tandem reunion of Adam Sandler and Jennifer Anniston. According to Netflix, who seldom releases viewership statistics, it grossed over 73 million views from household accounts worldwide — more than Netflix’s entire US base.

Stranger Things 3, a Netflix original series that launched in Q3, attracted 26.4 million unique viewers in the first four days of its release in the United States. It was “the most-watched Netflix original series [that] we’ve ever analyzed,” according to Nielsen data.

There’s also more in store this quarter with one of its biggest shows, Orange Is the New Black returns for its final season with Season 7. Variety said that the all-women prison drama series have at least accumulated a massive 105 million users that have watched an episode of the show.

Related: Netflix Originals Is Going Asian

Netflix is also looking to expanding its demographic outside the US and into other markets like Asia and Europe. Thus, it plans to continue ramping production of more original content to cater to these new customers.

Three shows in particular: How to Sell Drugs Online (Germany), The Rain (Denmark), and Quicksand (Sweden) have all found big audiences outside of their native region.

Theodore Anthony Sarandos Jr., the chief content officer for Netflix, said that each show has garnered around 12 to 15 million global viewers and that “they’ve been deeply relevant in the home country, and travel the region very, very well.”

In its letter to shareholders on Wednesday, Netflix said that while its US paid memberships were “essentially flat,” the company expects it to “return to more typical growth” in the third quarter. It expects to add another 7 million subscribers in Q3.

About the Author

Sean Louis Salazar
A communications graduate writing about the latest trends and news!

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