Netflix Price Hike Ruffles Competition

According to an eMarketer report, Netflix (Nasdaq: NFLX) accounted for nearly 86.7% of the US subscription Over-the-Top (OTT) video users in 2018. In 2019, the US OTT viewership is estimated to grow 2.5% to 205 million people with Netflix expected to retain market leadership. But there are several players in the market wanting to challenge its dominance. The competition in the market is surely heating up.

Netflix’s Financials

Netflix’s Q4 revenues grew 28% over the year to $4.19 billion, missing the Street’s forecast of $4.21 billion. Adjusted EPS of $0.30 was better than the market’s forecast of $0.24 for the quarter.

During the quarter, Netflix added 1.53 million domestic subscribers, ahead of the 1.5 million expected by the market. It also outpaced market expectation in the international markets, adding 7.31 million new subscribers in the quarter, compared with the 6.1 million expected. It ended the quarter with 139.3 million global subscribers. The US streaming customers brought in $2 million revenues in the quarter and international streaming customers added $2.1 million for the quarter.

Netflix ended the year with revenues growing 35% to $15.8 billion with an EPS of $2.78. Net income grew to $1.2 million from $0.56 million a year ago.

For the current quarter, Netflix expects revenues of $4.49 billion with an EPS of $0.56. The market was looking for revenues of $4.61 billion with an EPS of $0.82.

Netflix’s Content and Price Wars

Netflix has steadily been investing in content to drive user addition. During the recent quarter, it added several blockbuster hits such as You, Bird Box, and the UK series Bodyguard that helped draw viewers. It has been pushing into the family and children’s content segment and announced plans to roll out the animated series based on Roald Dahl’s books including titles like Charlie and the Chocolate FactoryThe BFG, Matilda, and The Twits. It is also experimenting with an interactive format and recently launched Black Mirror: Bandersnatch that allows users to choose from multiple options as to how they wanted the story to progress. It continued to gain recognition for its content and received several Oscar nominations for its home production Roma.

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