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Netflix Inc. has an ever-evolving view of its competitive landscape, and the current approach treats the popular online videogame “Fortnite” as more of a rival than HBO.
NBCUniversal is the latest media company to throw its hat into the ring with plans for a direct-to-consumer streaming service. Comparatively, Disney(NYSE: DIS) will be starting from ground zero when it launches Disney+ later this year, and AT&T's (NYSE: T) WarnerMedia is building on a relatively small base on HBO Now subscribers. Comcast can put NBCU's streaming service front and center for X1 and Sky Q subscribers and can use its advertising slots in regular broadcasts to promote the service to its subscribers. WarnerMedia's latest deal with Netflix for Friends only guarantees Netflix one more year of streaming the popular show. If NBCU doesn't bring its best content to the streaming service, very few people will sign up to watch, even if it's free.
Investors may be less willing to buy Netflix stock in two years as media companies such as Disney, Amazon and Apple will look to command a presence in the online streaming business, venture capitalist Gene Munster told CNBC on Thursday. Movie watchers will likely subscribe to numerous streaming brands, but the Loup Ventures founder said he isn't so optimistic about the equity's long-term outlook, because it will need more "substantial upside." "The issue here isn't about whether they have multiple subscriptions. The issue is more competition can have a negative impact on the multiple as investors think about different options," Munster said on "Fast Money." Netflix has a price-to-earnings ratio of $122.04 as of Thursday, which shows how much investors are willing to pay per dollar of earnings.
Investors may have been hoping for more after Netflix announced a price hike for U.S. subscribers earlier this week, usually a sign that demand is strong. The company released its massively popular dystopian movie "Bird Box" in late December, which helped attract a record 8.8 million new paid streaming customers in the fourth quarter. The company has staked its future on global expansion and creating original TV shows and movies to hook new customers and keep them paying monthly subscription fees. But it faces increasing competition from established TV and movie producers such as Walt Disney Co (DIS.N), which has stopped supplying new movies to Netflix in order to stock its own streaming service planned for later this year. It added an unprecedented 781 hours of U.S. original programming in the United States during the quarter, according to Cowen & Co analysts, including drama series "Narcos: Mexico" and holiday films such as "The Christmas Chronicles." For the fourth quarter, Netflix reported revenue of $4.19 billion (£3.23 billion) for the quarter that ended in December, slightly below the $4.21 billion that Wall Street analysts had forecast, according to IBES data from Refinitiv.
Netflix Inc. continued to expand its customer base at a rapid clip in the fourth quarter thanks to strong growth overseas, but higher content spending weighed on the streaming-video giant’s profit and it forecast a slowdown in revenue growth for the current quarter. Netflix added 8.8 million paid subscribers in 2018’s final quarter, up 34% compared with the year-earlier period. It previously forecast gaining 7.6 million new paid subscribers, and analysts polled by FactSet predicted 7.5 million.
The mixed response to its fourth-quarter earnings release Thursday reflects a far friendlier set of numbers but also an acknowledgment that Netflix has to stay on top of its game. The media company reported fourth-quarter earnings that exceeded its own expectations and analysts’, drawing more customers in international markets. Netflix added 7.3 million international users in the fourth quarter, a 42% increase over the same period last year.
Shares of Netflix (NFLX.O) up 0.2 pct on Thursday in likely calm before the storm as the streaming video company co prepares to report Q4 results after the bell. ** Of S&P 500 (.SPX) stocks, NFLX in the past has been the second most volatile in reaction to its quarterly reports, second only to Infinera (INFN.O), according to an analysis by Bespoke Investment Group. ** NFLX on avg has jumped 12 pct in the session following its Q4 reports, while declining on avg in the session after its Q1, Q2 and Q3 reports, Bespoke wrote in a recent client note. ** NFLX has surged in recent weeks, up 31 pct YTD and in third place for gains on the S&P 500 in 2019, behind Nektar Therapeutics (NKTR.O) and Celgene (CELG.O), both up 36 pct.
Netflix says it has 10% of all TV time in the US and discloses some colossal numbers for its shows. Though the company has typically omitted these numbers, it disclosed how some of its shows are performing in its fourth quarter 2018 earnings report Thursday. While the numbers paint a slightly clearer picture of Netflix's viewership, it still doesn't show exactly how many people have viewed the content, as it reported these numbers based on "member households," which leaves room for ambiguity since subscribers often share accounts. Overall, Netflix said it serves about 100 million hours of video per day, earning an estimated 10% of all time spent in front of the TV in the U.S. Netflix said its hit of the season, "Bird Box," featuring Sandra Bullock and inspiring countless memes, reached 80 million member households in its first four weeks on the streaming service. The top scripted show, "The Big Bang Theory," drew over 13 million. But Netflix does not view TV as its only competition -- in its earnings note, it also said that games like Fortnite compete for attention . Fortnite reportedly draws 200 million players per week .
The slightly disappointing forecast issued Thursday for the opening three months of the new year overshadowed a solid earnings report covering the final quarter of last year — a key period for Netflix because subscriptions to its service are a popular holiday gift. Management predicted the company will gain another 8.9 million subscribers from January to March, but only 1.6 million are expected in the U.S. That is down substantially from an increase of 2.3 million paid U.S. subscribers at the same time last year. That downturn in the U.S. raised alarms because Netflix is starting to raise its prices in the country by 13 to 18 percent this quarter, a move that Netflix is making to help pay for its rising programming costs as it competes for exclusive series and films against Amazon, Hulu, AT&T and Apple. But the higher U.S. prices also threaten to cause some existing subscribers to cancel the service and discourage prospective new customers from joining. Netflix's shares fell nearly 4 percent in Thursday's extended trading after the earnings report and forecast came out. Even so, Netflix's stock remains above its levels before the company announced the U.S. price increase earlier this week, a sign that more investors believe management is doing the right thing for the company's long-term financial health as it continues to burn through more cash than it is bringing in.
Netflix added 1.53 million paid subscribers in the US and 7.31 million abroad, beating Wall Street estimates. Earlier this week, Netflix shares gained 7 percent during a single session after announcing they would increase monthly subscription costs across its streaming plans. Shares of American Express fell as much as 4 percent after the bell Thursday after missing on the top and bottom lines. The company posted $10.47 billion of revenue, slightly lower than Wall Street's estimate of $10.56 billion.
