Netflix still dominates the streaming universe. As of the end of March, it had 207.6 million total paid subscribers, with about 67 million in the United States, the company noted in an earnings report Tuesday.
But its main competitors – Disney +, HBO Max, Paramount + and AppleTV +, as well as old guard streamers Amazon Prime Video and Hulu – have cut Netflix’s attention.
According to data firm Parrot Analytics, data company Parrot Analytics has grown in global demand for original Netflix shows, like “Bridgerton”. an metric that measures not only the number of viewers for certain shows, but also their ability to attract subscribers to their streaming service.
In his latest chart, Parrot reported that Netflix’s share of total demand – a measure of show popularity – was slightly higher than 50 percent in the first three months of the year, compared with 54 percent. a year ago and 65% in the first month. quarter of 2019.
In other words, the competition has started eating into Netflix’s dominance.
That is already shown in the numbers. During the first quarter of 2021, Netflix reported the addition of four million new customers, less than the six million they had forecast. The company expects to have only one million new customers for the current quarter ending this June.
Netflix shares plunged more than 9% in after-hours trading following the announcement of earnings.
The company doesn’t think its competitors have created a problem. “We do not believe that the intensity of competition has changed significantly during the quarter,” Netflix said in its letter to shareholders.
Led by co-executives Reed Hastings and Ted Sarandos, Netflix pulled back its pandemic-era products, now scheduled for release. The company didn’t have any major comeback streak this time around.
Netflix also raised prices in October, increasing their standard plan by one dollar to $ 14 a month. It added $ 2 to its premium tier, which currently costs $ 18. The company typically increases fees every 18 months. It is also trying to limit password sharing, a long prevalent practice.
Last year, during the same period, during the pandemic, the company added a record 15.7 million subscribers.
When most of the world is locked, people turn to screens to see the time. Netflix recorded a spike in new subscribers, resulting in a record year with nearly 37 million additional customers. It will be hard for the company to repeat that feat in 2021 when restaurants, shops, theaters and sports stadiums begin to open to full capacity across the country.
But Netflix is an international business. Much of its revenue now comes from abroad, and it has fueled its future growth in emerging markets like India and Latin America. Those areas have seen a recent increase in coronaviruses, causing new lockouts. Most of the world, including Europe, did not vaccinate its citizens as quickly as the United States did.
Netflix is still spending big. They spent $ 465 million on two sequels to the hit movie “Knives Out”, a price 50% higher than the first film’s total gross. It is also 10 times the film production cost. Hollywood lit up with gossip. Does Netflix pay too much?
The film’s director, Rian Johnson, came up with the concept for the film, and he and his production partner controlled the copyright. This lucrative deal matches Netflix’s priceless flirting with its Hollywood creators. It has nine-figure deals with popular TV producers including Ms. Rhimes and Ryan Murphy, as well as actor and producer Adam Sandler. Mr. Johnson can join their ranks by creating additional series and movies for the company.
Despite Netflix’s push to own its own content, it recently signed a distribution agreement with Sony Pictures Entertainment, Hollywood’s last major studio that is not tied to any of its streaming business. which route. Netflix will have rights to a number of Marvel franchises, including Sony-controlled “Spider-Man” and several character-based affiliates.
The company reported $ 1.7 billion in profit on $ 7.16 billion in revenue for the first quarter. Investors are looking for $ 1.3 billion in return on $ 7.1 billion in revenue.
In addition, the board has approved a $ 5 billion share buyback plan, which will reduce the number of existing shares outstanding, potentially making them more valuable.
Even though its competitors are gaining ground, Netflix is in the best financial position in its history. It hit a major milestone late last year, when they said they would not be looking to borrow money to fund their content team. Another way to look at it: Netflix has finally become a truly profitable business after reaching 200 million subscribers, each paying an average of $ 11 a month.
In other words: Its competitors are still losing a lot of money online.