Fri, Oct 18, 2019 - Page 10 News List

Netflix growth improves as streaming war looms

AFP, SAN FRANCISCO

Netflix Inc shares on Wednesday rallied after its latest quarterly update showed robust subscriber growth and better-than-expected profits ahead of a major escalation in the streaming television war.

Netflix reported a net income of US$665 million in the recently ended quarter, up from US$403 million in the same period last year and topping most analyst forecasts.

However, revenue and subscriber growth came in just shy of market consensus.

The California-based company saw revenue rise 31 percent to US$5.25 billion and added 6.8 million subscribers worldwide to reach a total of 158.3 million.

Netflix shares rose more than 10 percent after-market trades.

The company, whose recent hits include Stranger Things and The Crown, was upbeat on its ability to thrive even as powerful competitors, such as Walt Disney Co and Apple Inc, enter the streaming market next month.

When Netflix began streaming television to subscribers online about 12 years ago — in a pivot from just lending video discs through the mail — it was essentially Amazon Prime, Hulu, YouTube and Netflix itself competing with traditional television, chief executive Reed Hastings said in an earnings broadcast.

All of the streaming rivals will still find their main competition in broadcast TV, said Hastings, who is confident Netflix would thrive through compelling original shows.

“We see both Apple and Disney launching essentially the same week after 12 years of not being in the market,” Hastings said. “Fundamentally, it is more of the same. Disney will be a great competitor; Apple is just beginning but, you know, they will probably have some great shows too.”

However, eMarketer analyst Eric Haggstrom said the latest report includes signs of trouble ahead for the market leader, which fell short of its subscriber targets.

“The fourth quarter represents a completely new ballgame for Netflix as Disney+ and Apple TV+ will compete not just for subscribers, but for hit shows as well,” Haggstrom said. “The fact that Netflix has shown disappointing growth without the new competition present is a negative omen for Netflix in 2020 and beyond.”

More competition looms on the horizon, as AT&T Inc’s WarnerMedia will launch its new Netflix rival “HBO Max” early next year after reclaiming the rights from Netflix to stream its popular television comedy Friends.

Netflix trimmed its forecast for subscriber growth, saying it expected the count to be up 26.7 million at the end of this year.

It cited factors such as uncertainty about new viewers, response to price changes and forthcoming competition.

The third-quarter increase in revenue also means Netflix could invest to improve the service and make more original shows to battle competition in markets around the world.

“We have been moving increasingly to original content both because of the anticipated pullback of second run content from some studios and because our original content is working in the form of member viewing and engagement,” Netflix said.

“We’re expanding our non-English language original offerings because they continue to help grow our penetration in international markets,” it added

Netflix has released originally produced local language shows in 17 countries and has plans to expand to 30, chief content officer Ted Sarandos said.

The company said it would spend about US$15 billion in cash on content this year, with the majority of that money devoted to producing original shows.

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