Tuesday, 19 February 2019

Netflix growth chills as international competitors gather momentum

By Chris Kelly, Total Telecom
Friday 18 January 19

Despite record net additions in Q4 2018, Netflix still failed to meet analysts' predictions last year

Shares in US content streaming giant Netflix fell by 5 per cent yesterday as the company released a challenging set of figures for the fourth quarter of 2018.  Netflix posted revenues of $4.19 billion, narrowly missing industry estimates by around $20 million…

Shares in US content streaming giant Netflix fell by 5 per cent yesterday as the company released a challenging set of figures for the fourth quarter of 2018. 

Netflix posted revenues of $4.19 billion, narrowly missing industry estimates by around $20 million.  

Despite adding a record 8.84m new subscribers in Q4 2018, Netflix was still significantly down on the 9.18m net adds predicted by industry analysts. 

“It's been a modest quarter to end a mixed year for Netflix,” said tech, media and telecoms analyst, Paolo Pescatore. 

“This tends to be a strong quarter for Netflix due to the holiday season,” he added.  

Netflix is facing increased competition abroad, as a host of international players have recently announced plans to launch their own content streaming services. 

Last week, South Korea's biggest broadcasters signed a memorandum of understanding with SK Telecom, which set out their intention to launch a new streaming service.

“The year ahead will be pivotal. More providers will be launching SVOD services and they will want to pull their programming off Netflix. Also, expect the likes of Apple to make significant moves in video/TV,” Pescatore explained.  

“The market will be awash with video services. Users will be spoilt for choice, maybe a bit too much.” 

Challenging market conditions could translate into bad news for Netflix customers across the world, as the company struggles to recoup the money it has invested. 

“Worryingly, the company is burning through a lot of cash. It needs to recoup this by adding customers more quickly, increasing prices or taking on more debt. Therefore, expect price rises in all key markets. There will come a point that Netflix needs to diversify and offer a broad range of services,” Pescatore added. 

Also in the news:

Netflix gobbles up 15% of global broadband capacity 

Netflix shares slump on challenging Q2 figures

Netflix cosies up to telcos as it eyes Asian expansion

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