Netflix Subscriber Growth Falls As People Wait for Apple & Disney
The latest quarterly report from Netflix admits that increase in monthly prices may have led to fall in user growth.
Netflix's subscriber growth is bogging down even before the leading video streaming service confronts high-powered threats from Apple and Walt Disney Co.
The latest sign of the challenges the company is facing emerged Wednesday with the release of its third-quarter results. The numbers provided further evidence that Netflix's salad days may be over, particularly in the U.S., where most households that want its 12-year-old streaming service already have it.
Netflix added 6.8 million subscribers worldwide from July through September, below the 7 million customers forecast by the Los Gatos, California, company. Just 520,000 of those subscribers were picked up in the U.S., below the 800,000 that management anticipated.
The shortfall came after Netflix lost 123,000 subscribers in the U.S. during the April-June period, marking its first contraction in eight years.
Trouble in Netflix Paradise?
The latest miss on U.S. subscriber growth "spells trouble for the company ahead of heightened competition," said eMarketer analyst Eric Haggstrom. "The fourth quarter represents a completely new ballgame for Netflix."
Netflix said it expects to add another 7.6 million worldwide subscribers during the final three months of the year, down from 8.8 million during the same period last year in an acknowledgment of the fiercer competition.
The big question now is whether some of Netflix's existing subscribers will decide to cancel its service and defect to cheaper alternatives that Apple and Disney will launch within the next month.
Apple is charging only $5 (Rs 350) per month for its service, set for a 1 November debut, while Disney is selling a service featuring its vast library of treasured films and TV shows for just $7 (Rs 490 approx) per month beginning 12 November. While Netflix’s most popular plan in the U.S. costs $13 (Rs 910 approx) per month.
In India, the scope for Apple & Disney to succeed are even higher, as the plans from Apple are priced at Rs 99 per month, while Disney will bundle its content with Hotstar when it launches in the near future.
Price Factor Pushing Customers Away?
Netflix CEO Reed Hastings acknowledged Wednesday that a U.S. price increase imposed earlier this year is causing some current subscribers to cancel the service and perhaps causing some prospective customers to shy away.
Wedbush Securities analyst Daniel Ives said he is expecting Netflix to lose some of its appeal. He thinks the company could lose about 24 million subscribers, or about 15 percent of its customers, during the next 18 months.
As more competitors take aim at Netflix, some of them are also pulling their programming from the service. Disney is yanking its films from Netflix beginning next year. Beloved TV series "The Office" and "Friends' will disappear from the service in 2020 and 2021 in separate decisions made by NBC and AT&T.
The losses of those popular shows may hurt Netflix even more than the launch of competing streaming services from Apple and Disney, said Michael Pachter, another Wedbush Securities analyst.
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