Netflix didn’t make its subscriber growth targets in the three months ending in June. It missed by about a million subscribers, which scared off some investors. There are rumors that the streaming giant may have finally hit a saturation point, where it strikes a balance between subscribers subscribing and subscribers leaving. In other words, Netflix has reached all the interested audiences available and there aren’t enough people to make any significant growth for the platform overall.
Following this missed target, the stock dropped a huge 14% as reported by the BBC. This came after an impressive run that the stock was gaining over the past year.
Currently, the giant as 130M subscribers globally and projected 6.2M, but only hit about 5.2M instead. The streaming service is expected to face even more competition in the coming year. HBO Chief Executive John Stankey told his employees that the company needs to move away from prestige-programming and focus on Netflix’s high-content volume strategy. Apple also plans to launch a competing streaming service that’s in direct competition with Netflix. Disney, which currently dominates Hollywood’s landscape in properties like Marvel and Star Wars and brands with high-value will launch its own streaming platform following Netflix.
Netflix currently accounts for 8% of TV viewing overall, but it’s nothing to consider a dominant force. It’s been an investor darling in the past and many who thought it would take over TV, but that’s not the case. Netflix is often thought of as the service that’ll take over cable, but the landscape is looking for something like the old cable model in a custom built your own package. Subscribe to your channels and pay a fee. It’s not possible to bundle all of it into a service and sell it for $15/mo like Netflix.
CEO Reed Hastings told investors that they can expect good news regarding frequency and length of viewing sessions. CNBC suggests that subscribers watch an average of 10 hours per week and traditional viewers watch 20 hours, with cable being the top dog.
Netflix will spend up to $8 producing TV shows and films this year. Several series are yet to be announced, but some include Disenchantment, House of Cards, and Making a Murderer.