End of COVID-19 Boom, Netflix Growth Stalls in Fourth Quarter

Q4 Earnings Per Share of $1.33 Fall Short of Market Expectations

(Photo by MarketWatch)

[Asia Economy Reporter Yujin Cho] Netflix, the world's number one online video service (OTT) provider, continued to see stagnation in new subscriber growth in the fourth quarter. This is due to the disappearance of the COVID-19-driven boom and weakening dominance amid the expansion of latecomers' market shares.

According to Netflix IR materials on the 20th (local time), Netflix's earnings per share in the fourth quarter of last year were $1.33, significantly below Wall Street's expected $0.82. Revenue for the same period stood at $7.71 billion, in line with expectations.

Netflix's global new subscriber count in the fourth quarter of last year was 8.28 million. This figure is lower than the same period last year (8.5 million) and below the market forecast of 8.3 million based on FactSet.

Company executives expect the sharp stagnation in subscriber growth to continue this year as well. Due to the forecasted stagnation in subscriber growth and poor performance, Netflix's stock price fell more than 18% in after-hours trading on the day.

Foreign media analyzed that the end of the COVID-19 boom and intensified competition among OTT providers have shaken the market landscape, affecting the sharp decline in subscriber numbers.

CNBC analyzed, "As economic reopening from COVID-19 leads to increased outdoor activities, demand has decreased, and delays in content production have reduced exclusive content acquisition, causing loss of market dominance."

Latecomers armed with mergers and acquisitions (M&A) and independent studio operations, such as Amazon Prime Video and Disney+, are rapidly expanding their presence based on exclusive content, weakening Netflix's dominance that has lasted over a decade.

However, there is also positive anticipation regarding new business ventures. Netflix is expanding into new areas such as mobile gaming and consumer goods as a breakthrough to overcome growth stagnation. To this end, Netflix hired Mike Verdu, formerly of Electronic Arts (EA) and Facebook, as vice president of game development last year.

Bank of America recently stated in a report, "Despite intensified competition among OTT providers, continuous growth in the Asian region and expansion into new business areas such as mobile gaming and consumer goods this year are expected to increase new subscriber numbers."

This content was produced with the assistance of AI translation services.