Netflix's reliance on big hits will be a hurdle for future growth
Data: FactSet; Chart: Axios Visuals
Netflix's ambition is to replace television — to be the thing you turn on out of force of habit as you sink into your couch, whether or not you really have any idea what you want to watch. With a large enough library, and detailed enough data about your viewing preferences, Netflix should always be able to find something to entertain you.
Driving the news: The company disappointed the market with its second-quarter earnings report this week. International subscribers grew more slowly than anticipated, while the number of U.S. subscribers actually fell.
Subscriber growth will return in the third quarter, thanks in large part to season 3 of "Stranger Things." The lesson here is that Netflix needs a steady stream of new hits if it's going to keep on growing.
In Hollywood, no one can predictably manufacture a new hit every quarter. The more that Netflix is reliant on hits for future growth, the less excited Wall Street is going to be about the company.
The other side: Netflix kept substantially all of its U.S. subscribers even after hitting them with a 20% subscription-price hike. Even if a higher sticker price made it harder for Netflix to attract new subscribers, existing customers seem to be extremely loyal to the brand.
