Wells Fargo analyst Steven Cahall estimates that Netflix will lose 2 million subscribers in U.S. and Canada after the streaming service released the child exploitation film, Cuties.
Netflix will still net 2.5 million subscribers globally, about half of Cahall’s earlier projection of 5 million new subscribers.
But he does not foresee any long-term ramifications for Netflix’s sexualization of prepubescent girls, according to The Hollywood Reporter.
“We think the current controversy and elevated churn is essentially a flash in the pan for Netflix,” he said.
Cahall said Netflix will lose about 2 million U.S. and Canadian subscribers in the third quarter, which ends Wednesday, instead of gaining 500,000 subscribers as he had previously predicted for the quarter.
The U.S. and Canadian audience “bears the brunt of the Cuties detractors,” he said.
“If we are to believe reports, then Netflix faced a short-lived but potentially stark churn uptick in September due to controversy around Cuties,” he said. “We think this could weigh more heavily on third-quarter net adds than investors realize so we reduce our estimate for global streaming net adds. … Given how strong Netflix is as a service we’re loathe to get too negative, but our churn analysis does imply some meaningful pressure.”
Netflix’s typical “churn”—the number of people who cancel their subscriptions in a month—is about 3.5 to 4 percent.
But an analysis shows that September churn “might have reached levels that were some eight times August’s churn rate.”
“If we assume that churn increased five times for a single week due to Cuties, it implies … 28 million deactivations in the third quarter,” Cahall’s analysis found.
There is some reason to believe, however, that the controversy surrounding Cuties led some people to seek out the movie, according to The Hollywood Reporter.
When surveyed, 52 percent of respondents said they watched Cuties simply because of the cultural battle surrounding it.
After they watched the movie, 65 percent of respondents either strongly agreed or somewhat agreed that Netflix should not stream the movie.