By Natalie DeCoste

Netflix may have had a boom in subscriptions during the pandemic, but that surge is coming to an end.

The service is experiencing a slowdown in new subscriptions after the company suffered a year of production delays which caused it to put out fewer shows. The company currently has 208 million subscribers worldwide, up from 204 million in the last quarter.

Even with the 4 million subscriber increase, that number missed the company’s expectations for growth of 6 million. Netflix has reevaluated its growth and set expectations for new subscribers in the next quarter at 1 million. In comparison, during the second quarter of 2020, Netflix added 10 million new subscribers.

“We believe paid membership growth slowed due to the big Covid-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to Covid-19 production delays. We continue to anticipate a strong second half with the return of new seasons of some of our biggest hits and an exciting film lineup. In the short-term, there is some uncertainty from Covid-19; in the long-term, the rise of streaming to replace linear TV around the world is the clear trend in entertainment,” wrote Netflix in its letter to shareholders.

Reports of Netflix’s declining growth caused its stock to fall around 10% in after-hours trading.

“If you hit a wall with [subscriptions], then you pretty much don’t have a super growth strategy anymore in your most developed markets. What can they do to take even more revenue out of the market, above and beyond streaming revenues?” Michael Nathanson, a media analyst and founding partner at MoffettNathanson, told CNN Business.

Things should be looking up for Netflix later in the year with the return of popular Netflix original “The Witcher” and the debut of films with big stars, including The Rock and Leonardo DiCaprio. 

The average revenue per user is also on the rise for Netflix, which is another strong sign for the company’s future. The average Netflix subscriber in the U.S. and Canada pays $14.25 per month, up about 9% from a year ago.

The increase in revenue per user is significant as money from subscriptions is Netflix’s primary source of income. Netflix CEO Reed Hastings has been vocal about the unlikelihood of an ad-supported Netflix service, claiming that it does not make sense for the company as a business move. The company has been threatening a crackdown on password sharing to help boost the need for more subscribers.

“More and more new streaming services are launching, reinforcing our vision that linear TV will slowly give way to streaming entertainment. Despite our 10+ year head start, we are continually seeking operational and creative excellence; we’re working as hard as ever to continually improve our service so that we are the best entertainment option available with best in class stories, an ever-improving product experience, and authentic local titles that our members love,” said Netflix.