Published in News

Netflix has shedloads of profits but predicts a weaker future

by on17 April 2019

Tame Apple Press says it is competition from Disney and another Mickey Mouse outfit

Netflix gave a weaker forecast just as Walt Disney and Apple prepare to escalate Hollywood’s streaming video wars.

To be fair the company’s quarterly results beat Wall Street targets and the company predicted it would pick up five million new streaming subscribers from April through June. That was below the 5.48 million consensus of industry analysts surveyed by FactSet.

Netflix added a record number of paid streaming customers in the first quarter, reaching a total of 148.86 million.

But the Tame Apple Press is desperate to prove that competition from Apple’s new streaming service is going to mean that it is goodnight Vienna for Netflix. We are seeing quotes from analysts who say that there is a looming threat from Mickey Mouse streaming companies like Disney and Apple.

In a letter to shareholders, Netflix said it saw “some modest short-term churn effect” or dropping of its service, in response to the price increases.

From January through March, Netflix reported it added 7.86 million paid subscribers internationally, compared with the average analyst estimate of 7.14 million.

The company said it signed up 1.74 million paid subscribers in the United States in the quarter, above the average analyst estimate of about 1.57 million.

Disney is viewed as one of Netflix’s strongest rivals thanks to a broad portfolio of franchises popular with children - from Mickey Mouse to Marvel and Star Wars - and a brand trusted by parents. Last week, Disney priced its service at $7 per month, just over half the $13 price for Netflix’s most US popular plan. The Disney+ service will launch in November.  While Apple is the favourite with the Tame Apple Press it has no experience in the entertainment business and seems to think that programming should be a form of advertising its products.

But Netflix says it did not think the new entrants will materially affect its growth.

It said that the transition from linear to on-demand entertainment is so massive and because of the different nature of our content offerings. Disney, it said is leading a shift among traditional media companies that had been selling programming to Netflix for years. Now, many have decided to keep their content for their own services. AT&T's WarnerMedia and Comcast  plan to move into the streaming market.

Netflix spent $7.5 billion on TV shows and movies for 2018, and executives have said that amount will grow in 2019. The aggressive spending has led to a tripling of the company’s debt in two years, to $10.36 billion in 2018, from $3.36 billion in 2016.

For the first quarter, Netflix said its net income rose to $344.1 million, or 76 cents per share, from $290.1 million, or 64 cents per share, a year earlier. Analysts on average were expecting 57 cents per share.

Total revenue rose to $4.52 billion from $3.70 billion. Analysts on average had expected revenue of $4.50 billion.

Last modified on 17 April 2019
Rate this item
(0 votes)

Read more about: