Following a record year that saw Netflix add 36 million subscribers in 2020, the world's most popular video streaming service saw its subscriber growth slow significantly last year. According to the company's latest earnings release, Netflix added 8.3 million subscribers in the last three months of 2021, bringing total subscriber growth for the year to 18.2 million. That's the lowest annual subscriber gain since 2016, when Netflix added roughly the same number of new subs. While that may sound alarming at first glance, there's no need to hit the panic button on Netflix just yet.
According to the company's own assessment of the slowdown, it became a victim of its 2020 success, when a deluge of people signed up amid stay-at-home orders and limited options to spend their spare time. Many of those subscribers might otherwise have signed up later, creating what the company calls "Covid overhang" in its letter to shareholders. Another factor mentioned by the company in explaining the rapid slowdown following the initial pandemic burst is "macro-economic hardship in several parts of the world like Latin America."
For the first quarter of 2022, Netflix remains cautious in its guidance, predicting just 2.5 million net additions, compared to 4 million in 2021. That would be the slowest first-quarter growth since the company separated its DVD and streaming services in 2011, and is unlikely to calm the nerves of its shareholders.