Netflix forecasts tough start to 2020
BENGALURU/NEWYORK: Netflix Inc. has entered a new year that will be far tougher than the one it left behind.
International growth helped the streaming video service trounce expectations in the last quarter of 2019.
But the company acknowledged competition had an impact in the US, where growth missed Wall Street targets—and that competition will become more global as the Disney+ service launches across Europe in March.
Rivals including Walt Disney Co. and Apple Inc. are now fighting for streaming customers, and Netflix said it expects to add 7 million subscribers globally in the first quarter, below analysts’ average of 8.82 million, according to IBES data from Refinitiv.
For a company that has historically taken great pains to avoid mentioning competitive forces—it once called the video game Fortnite a bigger rival than other streaming services—it spent a considerable amount of time explaining why Disney’s power will not have as damaging an effect on its engine of growth outside of America.
“Despite the big debut of Disney+ and the launch of Apple TV+, our viewing per membership grew both globally and in the US on a year over year basis, consistent with recent quarters,” the company wrote in a letter to investors.
Netflix chief executive officer (CEO) Reed Hastings described the fourth quarter’s 8.76 million net subscriber growth—boosted by a new season of royal drama The Crown and two films nominated for Best Picture Oscars—as “just amazing.”
That number beat Wall Street estimates for the fourth quarter, helping to send shares up 2.2% in volatile after-hours trading on Tuesday.
Net income rose to $587 million in the fourth quarter from $134 million a year earlier.
Total revenue rose to $5.5 billion from $4.2 billion a year ago. The streaming giant said it added 8.76 million paid subscribers globally compared with expectations of 7.63 million, according to IBES data from Refinitiv.