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April 17, 2019

Netflix Posts Strong First Quarter, Not Concerned About Apple or Disney

Company posts solid figures

By CBR Staff Writer

Netflix has posted a strong first quarter, downplayed forecasts for the second quarter, while also making little of the new content streaming threats from Disney and Apple.

Paid subscriptions on the streaming giant’s platform rose by 16 percent year-over-year as the service recorded 9.6 million new subscribers.

A breakdown of its new subscribers shows that the company is growing faster outside of the United States, with 7.86 million new international subscribers, while the US only grew by 1.74 million. The company posted revenue growth that rose by 22 percent to $4.52 billion (£3.4 billion) in comparison to the previous year.

In a letter to shareholders Netflix shrugged off growing competition within the market, after Apple and Disney both announced their own direct-to-consumer subscription video services.

Netflix CEO Reed Hastings wrote to shareholders: “We don’t anticipate that these new entrants will materially affect our growth because the transition from linear to on demand entertainment is so massive and because of the differing nature of our content offerings. We believe we’ll all continue to grow as we each invest more in content and improve our service and as consumers continue to migrate away from linear viewing, similar to how US cable networks collectively grew for years as viewing shifted from broadcast networks during the 1980s and 1990s.”

He highlights that in the US, their strongest market, Netflix only accounts for 10 percent of total TV usage. They estimate that their global share of downstream mobile internet traffic accounts for just 2 percent of the market, which gives them significant room to grow internationally.

Netflix Views, Engagement and Content Creation

In an interesting move from a company that has always been a bit elusive with regards to viewer figures and individual show engagement, new betas are being launched that will show users which shows are the most popular. Netflix also plans to roll out more ‘specific granular reporting’ to their producers and members in order to be “more fully transparent about what people are watching on Netflix around the world.”

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The company is continuing to train its focus on in-house content creation. The strategy in development of the last few years has been to try and create content locally for each region, or in many cases each individual country.

Netflix Chief Content Officer Ted Saranodos commenting in an investor relations interview that: “The more authentically local the show is, the better it travels, which we’ve seen with Kingdom, so fans of K-Drama around the world loved that show and it resonated incredibly well for us in Korea. Similarly, coming up, we have a new season of The Rain coming out this quarter, that is perfectly Swedish.”

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