Netflix Growth Stalled in Q2 as Competitors Gained Ground and Lockdowns Lifted

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

Netflix Growth Stalled in Q2 as Competitors Gained Ground and Lockdowns Lifted

Netflix lost 430,000 subscribers in the U.S. and Canada last quarter as its meteoric growth sputtered.

In an investor call Tuesday, the Los Gatos streaming service said it is still feeling the aftershocks of the pandemic.

"We still feel a little bit of that drag in terms of our acquisition growth as we're working through what we hope is the tail end of this COVID choppiness," said Chief Financial Officer Spencer Neumann.

Shares of Netflix were near flat in after-hours trading.

The company logged 1.54 million net new subscribers in the second quarter, barely surpassing its internal forecast but falling far short of last year's pandemic-fueled growth spurt.

Analysts have been questioning whether the giant could keep up its growth. Wedbush Securities analyst Michael Pachter wrote in a note last week that the company is "approaching market saturation in North America." Two-thirds of its customer growth this quarter came from Asia.

Third-party data show signs of Netflix's slowdown. Although it still leads the pack in JustWatch's U.S. streaming market share, Netflix has seen a notable decline since January, as competitors Disney Plus and HBO Max rise. Another market analyst, Parrot Analytics, reported record low demand share for Netflix's original films and series in the second quarter.

With nearly 210 million subscribers, Netflix remains the dominant player in streaming, but its lead is thinning and some are beginning to call for antitrust investigations.

The company has forecast subscriber growth will stabilize in the coming months as the effects of the pandemic subside.

Meanwhile Netflix's counterparts are beefing up. Amazon acquired MGM in May shortly after HBO Max and Discovery merged. Disney continues churning out proprietary franchises and more industry consolidation is in the offing, Apple, too, is using its deep pockets to expand its film-production footprint.

Chief Executive Officer Reed Hastings acknowledged the steep competition that threatens to cut into audience viewing habits. But he sees room for growth across the board as audiences increasingly adopt streaming as their primary source of viewing.

"We think mostly all of streaming is a growth story competing from linear TV and that that will be true until streaming is 50, 60, 70 percent of viewing," he said, noting that recent data from Nielsen show streaming still only comprises about a quarter of total U.S. television watching.

Netflix remains wary of other forms of entertainment from social media to gaming competing for attention. In June, Netflix opened an online merchandise store and earlier this month it hired former EA and Oculus executive Mike Verdu to lead its gaming efforts. In a letter to shareholders, the company wrote that it will focus its gaming efforts on mobile devices.

"Since we are nearly a decade into our push into original programming, we think the time is right to learn more about how our members value games," the letter said.

Netflix also hinted at its own possible forays into acquisitions, writing that, "we don't view any assets as 'must-have' and we haven't yet found any large scale ones to be sufficiently compelling to act upon."

Subscribe to our newsletter to catch every headline.


Greater Good Health Raises $10 Million To Fix America’s Doctor Shortage

Keerthi Vedantam

Keerthi Vedantam is a bioscience reporter at dot.LA. She cut her teeth covering everything from cloud computing to 5G in San Francisco and Seattle. Before she covered tech, Keerthi reported on tribal lands and congressional policy in Washington, D.C. Connect with her on Twitter, Clubhouse (@keerthivedantam) or Signal at 408-470-0776.

Greater Good Health Raises $10 Million To Fix America’s Doctor Shortage
Courtesy of Greater Good Health

The pandemic highlighted what’s been a growing trend for years: Medical students are prioritizing high-paying specialty fields over primary care, leading to a shortage of primary care doctors who take care of a patient’s day-to-day health concerns. These physicians are a cornerstone of preventative health care, which when addressed can lower health care costs for patients, insurers and the government. But there’s a massive shortage of doctors all over the country, and the pipeline for primary care physicians is even weaker.

One local startup is offering a possible answer to this supply squeeze: nurse practitioners.

On Wednesday, Manhattan Beach-based Greater Good Health unveiled a $10 million Series A funding round led by LRVHealth, which adds to the startup’s $3 million seed round last year. The company employs nurse practitioners and pairs them with doctor’s offices and medical clinics; this allows nurse practitioners to take on patients who would otherwise have to wait weeks, or even months, to see a doctor.

Read more Show less

Plus Capital Partner Amanda Groves on Celebrity Equity Investments

Minnie Ingersoll
Minnie Ingersoll is a partner at TenOneTen and host of the LA Venture podcast. Prior to TenOneTen, Minnie was the COO and co-founder of $100M+, an online marketplace for used cars. Minnie started her career as an early product manager at Google. Minnie studied Computer Science at Stanford and has an MBA from HBS. She recently moved back to L.A. after 20+ years in the Bay Area and is excited to be a part of the growing tech ecosystem of Southern California. In her space time, Minnie surfs baby waves and raises baby people.
PLUS Capital​’s Amanda Groves.
Courtesy of Amanda Groves.

On this episode of the L.A. Venture podcast, Amanda Groves talks about how PLUS Capital advises celebrity investors and why more high-profile individuals are choosing to invest instead of endorse.

As a partner at PLUS, Groves works with over 70 artists and athletes, helping to guide their investment strategies. PLUS advises their talent roster to combine their financial capital with their social capital and focus on five investment areas: the future of work, future of education, health and wellness, the conscious consumer and sustainability.

Read more Show less

Rivian Stock Roller Coaster Continues as Amazon Van Delivery Faces Delays

David Shultz

David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.

Rivian Stock Roller Coaster Continues as Amazon Van Delivery Faces Delays
Courtesy of Rivian.

Rivian’s stock lost 7% yesterday on the back of news that the company could face delays in fulfilling Amazon’s order for a fleet of electric delivery vans due to legal issues with a supplier. The electric vehicle maker is suing Commercial Vehicle Group (CVG) over a pricing dispute related to the seats that the supplier promised, according to the Wall Street Journal.

Read more Show less