Netflix Q2 Preview: Don’t Expect a Subscriber Growth Rebound

Yinchen Niu/Variety Intelligence Platform

When Netflix reports its Q2 2021 earnings on Tuesday, Wall Street’s focus will, as always, be on how the video streamer’s subscriber additions during the previous quarter fared. Netflix in April anticipated adding just 1 million subscribers globally during Q2, compared to the monstrous 10 million added in the comparable 2020 period.  

The stark difference between projected Q2 ‘21 and actual Q2 ‘20 sub adds can largely be explained by COVID-19. Netflix’s Q2 of last year benefitted greatly from initial shelter-in-place orders. Meanwhile, the latest April-June period was when states opened vaccine availability to the general public and many U.S. consumers started becoming comfortable with entertainment activities like attending theme parks and movie theaters.  

So don’t expect Q2 to be a blowout quarter in terms of paid subs for Netflix. KeyBanc Capital Markets late last month cited internal data suggesting Netflix subscriber additions were tracking below its guidance for Q2 and anticipated the company will add 800,000 subscribers in Q2.  

Netflix is a global company and not every country has reopened like the U.S., but keep in mind how the streamer has been preaching the “pull-forward” effects of its big 2020 (i.e., Netflix’s overall H1 ‘20 sub growth is likely to come at the expense of growth in H1 ‘21). Growth could pick up more significantly for Netflix in the second half of the year, when marquee titles such as “The Witcher,” “You” and “Red Notice” will be debuting or returning.   

Tepid subscriber growth helps explain why Netflix is increasingly looking to branch out and experiment with areas beyond video streaming for growth. Netflix in June launched an online store featuring Netflix original-related goods and hopes to offer video games on its service within the next year, per Bloomberg. Meanwhile, Netflix earlier this month re-upped its megadeal with “Bridgerton”-creator Shonda Rhimes in a pact that covers games, live experiences, and merchandising, THR reported.  

This post features data visualizations from Variety Intelligence Platform’s Q2 2021 earnings previews for the industry’s biggest tech and media companies. For a complete list of the companies VIP has analyzed in advance of the Q2 earnings season, read our most recently published special report, “Q2 Preview: 2021 Financial Outlook for Key Media & Tech Companies.”  

Read the full special report