Deconfinement and the lack of renewal of content plague the streaming leader.

Deconfinement is causing Netflix to lose the main engine of its growth seen last year. Reed Hastings, the boss of the leader in video on demand, had admittedly warned of the risk of a slowdown in the recruitment of new subscribers, as the public, captive last year, is allowed to resume part of its activities normal. Netflix only captured 3.98 million new customers from January to March. This is half the ambition displayed by the Los Gatos (California) firm.

It misses by 2 million its goal of 210 million subscribers by the end of March. We have to go back to 2013 to find such a sluggish start to the year. And as the reopening of economies in many countries pushes viewers out of their homes, including to the movies, Netflix braces for an even poorer second quarter, with just 1 million more subscribers. Netflix’s price, after the Nasdaq closed, plunged nearly 9%. Since mid-March 2020, the stock has still climbed 65%.

We are therefore far today from the incredible gain of nearly 16 million subscribers posted in the first quarter of 2020, when the pandemic began to nail millions of Internet users, eager to escape and distractions, at home. “It’s the Covid’s fault», Summarizes Spencer Neumann, the group’s chief financial officer.

Not so fast», Retort many analysts, shocked by the extent of the brake. “There was nothing to watch this quarter on NetflixSays Michael Nathanson, one of the finest analysts in the media industry. Even Netflix concedes that the lack of renewal of its particularly rich content has made matters worse.

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Interrupted productions, late series

The streaming giant has certainly overcome in 2020 the slowdown in many of its productions, thanks to the momentum given to it by its massive investments in many series already in progress. If the production of content that can be disseminated this year has not completely stopped during confinement, due to its incompatibility with sanitary distancing rules, it has clearly slowed down. The effects of this break did not show much in the fourth quarter. On the other hand, the poverty of the new offers presented to subscribers at the start of 2021 is undeniable.

This is bad news for the next few quarters because, while filming and editing have resumed in all of its major markets, with the exception of Brazil and India, we will not start to find new episodes, new series and new films only towards the end of the year.

$ 17 billion investment in new content

Netflix on the other hand maintains that the rise of competition is not responsible for the halt to its insolent growth. Its executives point to the fact that the slowdown is affecting all of its markets around the world, not just those where Netflix has to fight the emergence of Disney +, HBO Max and Peacock.

In a post-pandemic world that hopes to return to normalcy, the production of new content is once again absolutely crucial to the continued growth of Netflix. The Californian giant intends to spend $ 17 billion this year on new content, compared to the 12.5 billion disbursed in 2020 and 14.8 billion spent in 2019. But since most of Netflix’s growth has been achieved for several quarters in outside the United States, foreign series, films and documentaries are given priority.

Europe remains an important growth region for Netflix. 1.8 million subscribers were recruited in the Europe, Middle East and Africa zone in the first quarter. The series in French Lupine, along with Omar Sy, proved to be the most popular of the new offerings during the quarter. A second season will be available this summer.

The good news is that Netflix’s financial performance is in many ways the best in its history. Its quarterly profits even more than doubled to a record high of $ 1.71 billion. Long criticized for “burning cash” because of its tendency to go into massive debt to meet its incredible propensity to spend on new productions, Netflix has yet generated nearly $ 700 million in cash flow during the quarter. Unfortunately, this is partly the result of the slowdown in many productions.



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