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Netflix results first trimester has sent a clear message to investors: the streaming pandemic boom is over.
“It simply came to our notice then [it’s] a little bustling right now ” Founder Reed Hastings told analysts after the company gave faster registrations in the first three months of the year. Worse still, Netflix warned that in the U.S., its largest market, subscribers would be “roughly flat” in the first half of 2021.
Part of that is explained by the special circumstances of the pandemic, which home viewers give to Netflix 2020 is the best year ever, Sealing the leader over fierce competition from Disney, Amazon, Apple and other big companies to compete for a share of the streaming economy.
Around the world, the market for subscription services is still growing; now there are more than half a billion subscribers for Amazon, Netflix and Disney alone. The proliferation of opposing services has led some to question the long-term strength of some observers.
In more mature markets like the US, Netflix has a tougher competition for time and money, whether it has it or not going out into the street, or other viewing options such as YouTube and free ad-funded streamers, such as NBC’s Peacock.
According to the US audience measurement company TVision, the time spent watching TV has steadily increased overall since October, falling from its peak in April. However, the share seen by Netflix has dropped. Stream service fees have dropped 5 percentage points in the last two quarters, while small opponents have made small gains. However, it comfortably remains the first issue.
While this pandemic impact has distorted the growth of Netflix and other streaming services, more problems with the company have also emerged in the company’s quarterly results. Netflix executives said weaker content, due to delays in Covid, delayed some programming and returned to fewer subscribers.
“Due to production delays, many of the projects we had hoped for earlier were pushed forward,” CEO Ted Sarandos said, telling investors that the company will return to a “stable state” in the second half. with the return of the year’s successes Witch.
Netflix now pays 208 million customers, and has gone from being a disruptor to a headline in a new streaming-defined entertainment business. Its valuation has risen to $ 225 billion.
But even on such a scale, recent earnings results show that Netflix has to spend heavily on programming to squeeze the number of subscribers, raising basic questions about whether streaming is a good business, continuously improving profit margins as subscription streaming facilitates investment and rising prices .
“For Netflix, too, it seems to be a critical factor in driving new and fresh original content… Increases in subscribers,” said Michael Nathanson, chief media analyst at Moffett Nathanson.
“This simple observation goes to the heart of our discussion about streaming and whether current assessments are consistent with the long-term dynamics of the business model,” he added.
The media group is struggling to get a share of the streaming market for tens of billions of people a year in TV shows and movies. Netflix said it was on track to spend more than $ 17 billion this year as Amazon, Disney and Warner Media, owners of HBO Max, are making investments in the original sessions to complete their archives.
Not all expenses become a success or a success. Hits, whether expensive or cheap, are the main underlying force driving the subscription reproduction economy. And as Hollywood knows, it’s very hard to predict.
Here the approaches taken by different streaming services are different. HBO has one of the smallest streaming libraries: the catalog of movies and programs mostly approved by Amazon is 13 times larger.
However, HBO is excellent at providing critically acclaimed sessions, as measured by the weighted ratings of websites calculated by Ampere Analysis. Libraries on Netflix and Amazon offer more quantity compared to consistent quality.
We believe that Netflix’s core product offering is “new and different every day,” compared to the exact success of XYZ, “said Bernstein-based analyst Todd Juenger, but added that subscriber growth could certainly be” successful. ” to be believed to be true, the more optimistic it would probably be [the second half of 2021], ”he said.
Additional report by Chris Campbell and Patrick Mathurin
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