Image: Netflix

Netflix shares plummetted in after-hours trading following the release of its latest earnings report. The streaming giant missed the mark on several of its projections, and analysts are blaming its lackluster content.

At the time of writing, Netflix shares were down around 14 percent, dropping from $400 per share to $343. CEO Reed Hastings called it “a strong but not stellar” quarter in a letter to shareholders. The top disappointment for investors was the addition of 5.15 million subscribers, close to a million fewer signups than Netflix projected. Fewer users than expected means it also failed to meet its own estimates for revenue and earnings per share.

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Bloomberg points out the dearth of megahits for the company, which is gradually becoming more reliant on original content:

One reason for the shortfall may have been a lack of content. Netflix released a thin slate of shows in the quarter, relative to its typical output. It didn’t add new seasons of its biggest hits, such as “Stranger Things,” nor did a new show become a phenomenon. Ever since Netflix released “House of Cards,” the company has credited new seasons of original series with luring new customers.

The new season of House of Cards has suffered a long delay after Netflix fired the show’s star, Kevin Spacey, following numerous sexual assault allegations. There’s no guarantee that the show’s upcoming final season can maintain its earlier momentum and bring audiences in. The company has been clear with shareholders that original content is its focus, earmarking $8 billion to produce its own films and TV shows in 2018. Last month, it bumped that number up to $13 billion. Overall, the number of movies it offers is reportedly shrinking, while its TV show catalog has nearly tripled in size, according to Flixable.

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Netflix doesn’t publicize how many people watch each of its individual properties, and it’s not all that important considering the fact that it’s a subscription service—all that matters, from Wall Street’s perspective, is that it retains users and adds new ones. That means keeping people happy and generating a lot of buzz for the hot new show. But as it throws more money into filling out its content, it seems like the quality of its programming has been dropping. Earlier this year, analysts reported that its original shows are getting more thumbs down ratings from users, and the last time it felt like it had a new phenomenon on its hands was with the release of Will Smith’s Bright—a film that people mostly watched just to see if it was bad as everyone said it was.

As far as bragging rights for quality goes, Netflix made sure to highlight the fact that it received more Emmy nominations than HBO for the first time in its history. But aside from the second season of GLOW squeaking in in the last couple of weeks, the shows that earned it plaudits were absent from this quarter. It was left to highlight shows like Lost in Space and Boss Baby: Back in Business.

Adding to its potential problems in the future, Disney plans to pull a ton of content from Netflix in 2019 and launch its own competing streaming service. Throw in the increased competition from Hulu, Prime Video, and the growing range of cordcutting services, and Netflix may not be as bulletproof as investors have come to expect in the last few years.

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Hopefully, this financial hiccup encourages Netflix to focus a little more on quality and maybe HBO’s new overlords will realize that pumping out as much content as possible is no substitute for making a few really great choices.

[Netflix, Bloomberg]