On a sunny midsummer weekend in Los Angeles, Netflix turned the Santa Monica Pier — one of the city’s busiest tourist destinations — into a three dimensional marketing blitz, transforming it into the fictional 1980s Indiana town where its hit show Stranger Things is set. The 110- year- old structures were dressed up to mimic the show’s location; the Ferris wheel was flashing eerie red lights over the Pacific Ocean. The night before, there had been a full marching band for a lavish premiere party.
Read Also: Netflix stumbles as competitors prepare to swoop
The marketing push illustrated how critical the show is to the subscription- reliant digital streaming service. The July 4 arrival of the third series of Stranger Things was the “biggest content drop” of 2019 for Netflix, says Bernstein analyst Todd Juenger. “If any one piece of content would make a difference on [subscriber additions], that should be the one,” he adds.
He was right. Global subscriber numbers spiked in the first two weeks of July. Unfortunately for Netflix it was two weeks too late.
In the quarter to the end of June the company lost subscribers in the US — 126,000 of them — for the first time since 2011. Equally worrying, outside the US the company signed up only 2.8m subscribers — about half of what Netflix had predicted. The market wiped $ 17bn off Netflix’s stock value overnight, emphasising the brutal correlation between new subscribers and stock market value.
The company is predicting 7m new subscribers in the third quarter. But the dramatic fall in the second quarter — even before the arrival of greater competition from Apple and others later this year — has cast doubt over whether the company, that successfully took on the Hollywood hierarchy is as invincible as it previously seemed.
“The next best thing to success in Hollywood is schadenfreude,” says a senior executive at an independent film studio who has worked with Netflix on TV projects. “There is no better sport. It might even eclipse your own success.”
Wall Street is now seeking evidence as to whether this miss was a blip or a trend. The stock market has become “addicted” to Netflix’s subscriber growth, says Aswath Damodaran, a finance professor at New York university’s Stern School of Business who closely follows the company.
