According to a MarketandMarkets report, the global video streaming market is expected to grow from $30.29 billion in 2016 to $70.05 billion by 2021, at a CAGR of 18.3% during the forecast period. The pioneer in video streaming Netflix (Nasdaq: NFLX) is reaping the benefits of this trend with its original content strategy.
Netflix’s Financials
Netflix’s third quarter revenues grew 30% over the year to $2.98 billion, ahead of the Street’s forecast of $2.97 billion for the quarter. EPS of $0.37 beat market’s projections of $0.32 for the quarter.
During the quarter, it added 5.3 million net subscribers (up 49%), compared with the Street’s estimates of 4.5 million subscriber net adds. US subscriber base grew by 850,000, compared with the Street’s forecast of an addition of 810,000 subscribers. It added 4.45 million international subscribers, compared with analyst estimates of 3.69 million net adds.
For the fourth quarter, Netflix projected revenues of $3.27 billion and EPS of $0.41. It forecasts global net adds of 6.3 million subscribers including 1.25 million US subscribers and 5.05 million international subscribers. Analysts have forecast revenues of $3.15 billion and an EPS of $0.33. The market expects net adds of 6.25 million subscribers.
Increasing Competition
Competition for Netflix is increasing from all quarters. Disney recently announced plans to launch its own streaming platform and will be pulling out its movies from Netflix by the end of 2019. This adds to the competition from Apple and Amazon. Apple is reportedly planning to spend $1 billion on original content while Amazon’ Prime Video service presents a global threat. Even Facebook has joined the fray with its Watch tab for original video content.
This is when Netflix’s original content strategy will help it face this competition onslaught. It has several must-see new releases, like Stranger Things, Orange is the New Black, House of Cards, Fuller House, Making a Murderer, Narcos, The Crown, and 13 Reasons Why, among many others.
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