Netflix reports strong Q4 despite growing competition
Netflix reported robust new subscriber figures and financials for the last quarter of 2019 despite new competition from Apple and Disney.
Anousha Sakoui reported the news for the Los Angeles TImes:
Powered by the popularity of “The Witcher” and “The Crown,” Netflix profits and global growth surged in the fourth quarter, even as the company faced fresh challenges from rival services operated by Walt Disney Co. and Apple.
Netflix said it added 8.8 million subscribers in the fourth quarter of 2019, bringing its global total to 167.1 million, which was well above forecasts.
Fourth-quarter revenue grew 31% to $5.47 billion over the same period last year, while net income rose to $587 million, up from $133.9 million a year ago and easily topping analyst projections of $240.3 million, according to FactSet.
However, the strong results were tempered by signs of a continued slowdown in the U.S. Netflix added 423,000 customers in the quarter, far below the 600,000 it had projected, bringing its U.S. customer total to 61 million.
Moreover, Netflix telegraphed that it would add fewer subscribers — 7 million — in the first quarter of 2020 than Wall Street was expecting. The Los Gatos company cited the effect of competition and price increases.
Last year Netflix upped the price of its subscription plans in the U.S., which led to a notable subscriber drop in the second quarter. Its most popular plan, a standard subscription, went up $2, to $12.99 a month. The basic monthly subscription rose $1, to $8.99.
USA Today’s Mike Snider reported:
Did the arrival of Disney+ and Apple TV+ cause streaming audiences to cool off their love affair and chill less with Netflix? Apparently not.
Despite two new heavyweight contenders, the net TV provider added more subscribers than expected – beating several Wall Street metrics. And viewership is 40% higher for returning royals series “The Crown,” while “The Witcher,” a new series launched just last month, is tracking to be Netflix’s best viewed season one TV series yet with 76 million homes watching the fantasy series.
Take that, Baby Yoda and “The Mandalorian.”
Netflix said Tuesday that it added 8.76 million subscribers worldwide between October and December 2019 – it was during November that Disney+ and Apple TV+ joined the streaming wars. Netflix’s growth surpassed Wall Street expectations and its own forecast of 7.6 million new subscribers.
Overall, Netflix grew 20% over the last year and now has 167.1 million subscribers worldwide, with more than 100 million outside the U.S.
The recent love the streamer has gotten from the Academy hasn’t hurt either – and could help sustain subscriber numbers in the current January-March quarter. Netflix expects to gain 7 million subscribers in Q1, compared to its all-time quarterly high growth of 9.6 million in the same period a year ago.
Edmund Lee from The New York Times wrote:
Reed Hastings, the chief executive of Netflix, has grown used to going up against Amazon, Hulu and YouTube. But the Walt Disney Company’s entry into the streaming industry, with Disney Plus, caught his attention.
After Netflix released its earnings figures for the fourth quarter of 2019 on Tuesday, Mr. Hastings noted his new rival’s “great” content lineup, including “The Mandalorian,” a “Star Wars” series featuring the character known as Baby Yoda. And in a rare acknowledgment of a competitor’s strength, he added that the emergence of Disney in streaming “takes away a little from us.”
Disney Plus started strong in November, signing up 10 million customers on its first day, and industry insiders wondered how much Disney might have dinged Netflix.
Turns out, a little bit, according to Netflix’s latest results.
The streaming giant signed up 420,000 new customers in the United States during the last three months of 2019, the company reported. That fell shy of the 600,000 it had expected.
Netflix misses its estimates about half the time, but the company suggested that, for this quarter, Disney Plus might have had a moderate impact. But in Mr. Hastings’s view, Disney is more of a threat to traditional television. “Most of their growth in the future is coming out of linear TV,” he said in a call with investors after the earnings announcement.