FOX Business’ Robert Gray discusses the mounting challenges faced by Netflix.
Netflix downplayed concerns about increased competition from the upcoming launches of rival services from Apple (Nov. 1) and Disney (Nov. 12) even as it released mixed quarterly results in its final report before their debut.
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The California-based company’s leading position among streaming platforms faces an unprecedented challenge with Disney+ and Apple+ next month and WarnerMedia’s revamped HBO Max and NBCUniversal’s Peacock set to launch by the end of 2019. In a letter to shareholders, Netflix warned of “some modest headwind” related to the launches, but added that the competition is factored into its financial guidance and shouldn’t hurt its long-term prospects.
“Many are focused on the ‘streaming wars,’ but we’ve been competing with streamers (Amazon, YouTube, Hulu) as well as linear TV for over a decade. The upcoming arrival of services like Disney+, Apple TV+, HBO Max, and Peacock is increased competition, but we are all small compared to linear TV,” the letter said. “While the new competitors have some great titles (especially catalog titles), none have the variety, diversity and quality of new original programming that we are producing around the world.”
Netflix has made massive investments in original content in recent quarters in a bid to bolster its lineup and lure new subscribers. The company reaffirmed that it will spend $15 billion in content in 2019 alone.
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Upcoming releases include legendary director Martin Scorsese’s latest film “The Irishman,” which has earned rave early reviews from critics.
“Amazing content can be expensive. We don’t shy away from taking bold swings if we think the business impact will also be amazing,” the company added.
Disney+ will launch on Nov. 12 and cost $6.99 per month. Apple+ debuts on Nov. 1 and will cost $4.99 a month. Both are cheaper than Netflix’s base plan, which costs $8.99 per month.
Netflix added 517,000 net paid U.S. subscribers in the third quarter, well below the 802,000 additions expected according to Refinitiv estimates and the company’s own quarterly projection. The company outpaced expectations in the international market, adding 6.26 million net paid subscribers.
Wall Street considers subscriber growth as a crucial bellwether for the health of Netflix’s business.
Netflix reported earnings per share of $1.47 for the third quarter, ahead of Refinitiv’s estimates. Quarterly revenue of $5.24 billion was in line with expectations.
Shares rose more than seven percent in after-hours trading on the results.
For the fourth quarter, Netflix projects 7.6 million global paid net additions, down from 8.84 million in the same period one year ago.
