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Netflix’s Subscriber Base is Growing, But Not In North America

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Netflix’s subscriber base is growing, but not in North America — in fact, its subscriber base in North America dropped by almost half a million in the second quarter of 2021, which the streaming giant blames on the ongoing COVID-19 pandemic.

This news comes by way of The Hollywood Reporter, which reports that Netflix topped its expectations for the second quarter after raising its subscriber count by 1.5 million. This brings its total subscriber base to 209 million.

Netflix Spotlight: July 2021

However, despite that growth, which was largely shouldered by a net of more than one million new subscribers in the Asian-Pacific region, the company saw its North American subscriber base drop by 400,000. In terms of revenue, the company delivered $7.3 billion in the second quarter, up from the $7.16 billion in the first quarter.

In the most respects, the news is positive for Netflix. Lower marketing and content spending resulted in margins that have never been higher, with average revenue per user in the U.S. and Canada sitting at $14.54 in the second quarter —higher than any other streaming service on the market, according to Netflix. That average revenue per user number sits below $10 in the Latin America and Asia-Pacific markets, though.

As for why North America’s subscriber base has dropped, and why the company has struggled in 2021 versus previous years in its history, Netflix says COVID-19 is to blame.

“It really boils down to COVID, frankly,” Netflix CFO Spencer Neumann said on a company earnings call. “For us, at a minimum, it creates some short-term choppiness in the business trends.”

Netflix is expecting “3.5 million net subscriber adds in the 3rd quarter of 2021.” This represents a shift in subscriber count expectations from the company that has aimed higher in year’s past. This modest expectation of 3.5 million likely stems from the company’s first quarter, which saw it add just 4 million subscribers despite forecasting 6 million. Netflix reportedly added 15.8 million subscribers in the same quarter in 2020.

“We had those 10 years that were smooth as silk, and we are just a little bit wobbly right now,” Netflix Co-CEO Reed Hastings said on the call.

Despite that wobbliness, Netflix is “betting that a return to more normalized film and TV production and an increased cadence of originals later this year will help it return to growth,” according to THR.

Perhaps Netflix’s venture into video games will help fuel new growth for the company, which just hired ex-EA and Facebook executive Mike Verdu to lead its game development. Netflix revealed today that it will focus on mobile games first in this new venture, saying that it won’t charge an additional fee for games in doing so.

Wesley LeBlanc is a freelance news writer and guide maker for IGN. You can follow him on Twitter @LeBlancWes.

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