قالب وردپرس درنا توس
Home / Business / Netflix says that competition, prices can slow subscriber growth

Netflix says that competition, prices can slow subscriber growth



Netflix has finally admitted what we all knew.

With the streaming wars that started within a few weeks, Netflix is ​​facing serious competition for the first time since it began streaming over a decade ago.

And the competition from the upcoming releases of Disney + and Apple TV +, along with several others from major media brands such as HBO and NBC, could negatively impact Netflix's subscriber growth.

Netflix revealed these problems after the mixed earnings report on Wednesday showing a turnaround on earnings but a miss for subscribers. The company also predicted that it will add fewer subscribers in the fourth quarter of this year than it did a year ago.

And the reasons are obvious:

Price increases make people opt out. In January of this year, Netflix raised prices, with its most popular HD streaming plan going from $ 1

0.99 per month to $ 12.99 per month. In its letter to shareholders, Netflix said the price increase was partly to blame for the subscriber's loss.

"Since our US price increase earlier this year, retention has not yet fully returned on a sustained basis to levels of price change, which has led to slower growth in US membership," the letter states.

Price increases come as Disney + and Apple + plan to offer their services for far cheaper than Netflix. Disney +, which includes a massive library of Disney, Marvel and Pixar shows and movies, will cost $ 6.99 per month. Apple TV +, which will only have a handful of shows at launch, will cost $ 4.99 per month. (Apple TV + will also be free for one year if you purchase a new Apple gadget like the iPhone 11.)

Competition from new streamers can hurt subscriber growth. Netflix said in its shareholder letter that the "noisy" launch of new streaming service could lead to "some modest headwind to our near-term growth."

Apple TV + launches November 1st. Disney + launches November 12. And in the months that follow, we will have the launches of Peacock from NBC and HBO Max from AT & T & # 39; s WarnerMedia.

Result: Netflix estimates 7.6 million global net additions for the quarter, up from 8.8 million in the same quarter a year earlier. At the company's earnings interview, CEO Reed Hastings said he hopes to blow away subdued expectations, but that the company warns that slower growth may be on the horizon is an admission that the fear of competition is very real.

So, what is Netflix's plan to fight back against these new threats?

Content. Contents. And more content.

Netflix continues to invest billions back in programming and has a number of new films and shows launched over the next few months, including the lively Martin Scorsese tab "The Irishman" and the fantasy epic TV show "The Witcher . "

On Wednesday, Netflix top executives said that it will continue its strategy of producing shows people love, and do so periodically so as not to lose subscribers in the quarters when there is nothing good to watch. (Some of what we saw when Netflix lost subscribers in the second quarter.)

But there was another interesting nugget on the content strategy conversation. Netflix's content manager Ted Sarandos brought up how popular franchises play in streaming. Disney + will launch popular and proven franchises from Mickey Mouse to "Star Wars" to "The Simpsons." Disney will have 70+ years of great franchises ready to see when the service launches. But Netflix has to build its own franchises from scratch.

Sarandos seemed to see it as a strength.

"I think it's just as valuable as pulling out a bunch of different franchise services and waiting for them to burn out," Sarandos said of Netflix building its own franchises during the revenue call Wednesday.

But there is also the Netflix content problem in a nutshell.

So far, it has not proven that it can build a Disney-caliber franchise. "Stranger Things" may be the closest, but it's not enough to keep Netflix subscribers sucked year-round and in-between seasons. Meanwhile, Netflix will lose some of its most popular third party franchises such as "The Office" and "Friends" to its rivals.

In short, this week Netflix admitted that it can be too expensive and lacks enough engaging things to watch to keep subscribers growing at the levels it needs. The pressure is on.

Disclosure: NBC is part of NBCUniversal, the parent company of CNBC.


Source link