Published: Fri, October 18, 2019
Life&Culture | By Sue Mclaughlin

Netflix returns to subscriber growth in 'make or break' quarter

Netflix returns to subscriber growth in 'make or break' quarter

With hotly-anticipated new streaming media services set to pop up left and right in the coming months, there has been some uneasiness surrounding Netflix lately.

It is Netflix's final quarterly results before Apple and Disney enter the streaming market, bringing with them competition which has been sorely missing in the video streaming market so far. With the streaming service explaining it's been in competition with Amazon, Hulu and YouTube, as well as linear TV, for years.

Netflix is counting on the unique lineup of award-winning TV shows and movies that it has amass since expanding into original programming six years ago to help it retain its competitive edge and attract more subscribers.

Netflix slightly trimmed its forecast for subscriber growth, saying it expected the count to be up 26.7 million at the end of this year, but that its positive outlook for the future remained firm.

Wall Street cheered a rebound in Netflix subscribers in the third quarter, driving shares in the firm 9 per cent higher on Thursday even as analysts warned conservative estimates for the next three months may be a hint of less certain times ahead.

Netflix is expected to spend about $16 billion in content this year, a number that is expected to grow to $35 billion in 2025, according to Pivotal Research.

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Products, partnerships and new experiments have also been successful for Netflix.

Some industry experts have questioned the value and wisdom of such deals, while C21 exclusively revealed earlier this week that one of Netflix's biggest and most expensive dramas, The Crown, will only remain with it exclusively for a few more months, with Sony Pictures Entertainment preparing to sell the show into the linear market. Not just its competition, but the competition of all streaming services. And Disney already is heavily promoting on Twitter its forthcoming service by highlighting that it will feature classic films such as "Snow White and The Seven Dwarfs" and "The Lion King".

Wedbush Securities analyst Daniel Ives said he is expecting Netflix to lose some of its appeal.

On the other hand, the shareholder letter from Netflix sends a more blunt message regarding its competitors.

"Netflix is going to lose 50 per cent of its most-viewed hours during the next two years", Pachter said.

It wasn't a shock, however, as Dan Salmon, BMO Capital Markets managing director of United States internet and media equity research, says there has been a decline in subscribers for paid TV ecosystem in general for the last six or seven years. The debt will make it very hard for the company to cut its prices without risking bankruptcy, Pachter said.

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