Netflix Subscriber Growth Finally Hits a Wall, Just As The Streaming Wars Are Getting Started

The fact that Netflix missed its quarterly growth target by 2.3 million subscribers isn’t nearly as alarming as the reason — not enough breakout hits — as four well-funded, content-stocked competitors will be launching later this year.

“We don’t believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2,” Netflix CEO Reed Hastings said Wednesday in his quarterly earnings letter to shareholders. “Rather, we think Q2’s content slate drove less growth in paid net adds than we anticipated.”

Competition is about to become a very big factor for Netflix. Disney+ launches on November 12, Apple TV+ launches this fall, HBO Max launches this fall in beta, and NBCUniversal’s unnamed streamer launches in early 2019. That’s in addition to Hulu adding 3 million U.S. subscribers in the first four months of 2019.

Netflix added 2.7 million new subscribers globally during the quarter but actually lost 130,000 U.S. subscribers. The company all but admitted in its earnings letter that the service is a hit-driven business, highlighting Adam Sandler comedy Murder Mystery as its most-watched original in the quarter with 73 million households — nearly half of Netflix’s 151.6 million households globally — watching the film during the film’s first four weeks in release.

The other second-quarter highlights were lower-key — Ali Wong romantic comedy Always Be My Maybe (32 million), Christina Applegate dramedy series Dead to Me (30 million) and Ava DuVernay drama series When They See Us (25 million).

Netflix had 5.5 million new subscribers in the second quarter of 2018 vs. 2.7 million new subscribers in the second quarter of 2019. The company is more bullish on the upcoming quarter — projecting 7 million new subscribers vs. 6.1 million in the same quarter a year ago. The new season of mega-hit Stranger Things premiered on July 4, and Netflix said that its third quarter is already off to a strong start.

The current quarter will be the last before Disney+ launches November 12 with originals including Star Wars series The Mandalorian, Pixar series Forky Asks a Question, live-action Disney remake Lady and the Tramp and a huge catalog of Star Wars, Marvel, Disney, National Geographic and other film and TV titles for $6.99 a month ($2 less than Netflix’s starting monthly plan).

Netflix’s pressure to deliver hits comes at a time when more than half of its 20 most-watched film and TV titles new survey by media analyst MoffettNathanson and data firm HarrisX are either winding down or preparing to exit the catalog.

Orange Is the New Black, Netflix’s most-watched show according to the survey, premieres its final season season on July 26. Daredevil, The Ranch, House of Cards, Santa Clarita Diet, Jessica Jones, 13 Reasons Why and Fuller House are winding down or already finished. The Office is leaving Netflix in January 2021 to join NBCUniversal’s new service, and Friends is leaving Netflix in 2020 to join the new HBO Max service.

Scott Porch writes about the TV business for Decider and is a contributing writer for The Daily Beast. You can follow him on Twitter @ScottPorch.