Netflix is doing well–for now
Earnings season is upon us again, and Netflix's earnings arriving today had me thinking: is this the last big quarter before the good times are over? The old-school juggernauts are entering the streaming wars in the next few months, so we're all left to try and understand if that matters to Netflix.
Apple TV+ is launching on November 1, with a small but high quality of content to start with, and Disney is following that lead with the launch of similarly-named, but not related, Disney+ on November 12, as well as new services like HBO Max and NBC's 'Peacock.'
Outside of Hulu and HBO, Netflix hasn't faced that much streaming competition to date, but it's about to completely change.At earnings, Netflix reported better than expected earnings, at $5.4 billion in revenue, but what it missed on is interesting: it added 500K subscribers instead of an estimated 800K in the U.S. alone.
I might have read into this a little more if it weren't for another key metric: Netflix still added 6.26 million international subscribers, which is where it has an enormous lead. The company has scaled up globally incredibly fast, and has some of the best original content for international audiences available today.
The reserved domestic growth might tell us something on its own, perhaps that subscribers are waiting to see if Disney+ and Apple TV+ are worth it, or it might just mean nothing at all. Do subscribers really gleefully save their excitement to had a company a recurring fee? It's hard to say.
Still, it's worth watching closely, as Netflix warns that "minor elevated churn" (in human speak: users cancelling their subscriptions) is likely to occur in the coming months, especially as the launch of competition will be "noisy" at first, as they grab for the company's subscribers.
I don't think Netflix is going anywhere, it just means there's more competition as choice arrives. Spotify didn't get any worse when Apple Music came into the market, but instead it had to amp up its improvements to the catalogue and services quickly, as well as offering more competitive options for family plans, for example.
Netflix has largely played in this space alone, and they're the name everyone thinks of first. If anything, all it needs to do is wait until Disney gets bored of running its own service, and win a deal to add the company's content back to Netflix.
Until then, for consumers, the market will look fragmented and messy... but in the end, it'll likely mean more great TV and movies, available on multiple services. There's just no need to panic!
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