By Dawn Chmielewski

(Reuters) – Even as Netflix Inc (NASDAQ:) executives sought to reassure investors in a Thursday video interview that its long-term prospects for streaming media remain bright, with its popular series “Bridgerton” returning for a second season and a science-fiction film starring Ryan Reynolds coming soon, shares slipped.

Netflix stock fell more than 20% by the close of the 45 minute earnings interview. This cast a shadow over entertainment and the industry. Wall Street analysts and the company’s own executives struggled to explain why the world’s dominant streaming service forecast modest growth for the first three months of 2022, when many had anticipated a return to predictable, pre-pandemic quarterly gains.

Spencer Neumann (CFO Netflix) stated, “It is difficult to know exactly why our acquisition haven’t kinda recovered to pre–Covid levels.” The overhang in Covid is likely to be a result of some microeconomic stress in parts of the world like Latin America. This happened after two years’ worth of pandemics around the globe.

Tech and media stocks that have made significant investments in streaming technology, such as the Walt Disney (NYSE:) Co. ViacomCBS. (NASDAQ:) Roku (NASDAQ) All prices dropped during after-hours trade.

Netflix predicted gains of 2.25 million subscribers during the January to March quarter. That’s roughly two-thirds the number of customers it added over the previous year. Wall Street analysts pointed to heightened competition and a slower-than-anticipated return to normalcy after the distortions of the pandemic as possible factors.

Analyst at Pivotal Research Group Jeff Wlodarczak stated that Netflix and the other services that gained subscribers in the early 2020 pandemic lockdown – such as Disney+ or Peloton (NASDAQ;) – are still struggling to find equilibrium following outsized gains.

“Streaming is not over, it is the future,” Wlodarczak wrote. “And today, streaming still has a relatively small percentage of global television viewership.”

Others saw Netflix’s muted first-quarter forecast as a sign of intensifying competition – though co-CEO Ted Sarandos told investors: “We didn’t see a hit to our engagement. The retention was not affected – these are all things that traditionally lead us to look at the competition.

To attract customers, rival services like Disney’s Disney+ and WarnerMedia’s HBO Max, as well as Amazon (NASDAQ: Prime Video) spend billions of dollars on content.

“The reality is that the streaming market has become saturated,” wrote Mike Proulx, vice president of research for Forrester. “This translates to more choice for consumers, who are growing concerned with the aggregate costs of their streaming subscriptions.”

Though 90 percent of Netflix’s growth is expected to come from outside its home market, analysts are closely tracking how Netflix’s latest price increase, which boosted the cost of a monthly subscription to $15, will affect subscriptions in the United States and Canada.

“Whether Netflix can retain subscribers at historical rates now that their most popular tier costs the same as HBO Max after their most recent price increase will be important to gauge,” wrote Joe McCormack, Analyst at Third Bridge, “As we head into a 2022 year that many seem to believe will come with streaming video subscriber saturation overall.”

Reed Hastings, the Netflix founder and CEO, told investors that there is plenty of room for growth as streaming slowly replaces television in the next decade.

He said, “For the moment, we are just like remaining calm.”