20 April, 2017
Streaming video pioneer Netflix Inc ended the first quarter with fewer customers than Wall Street expected but issued a bullish forecast on the number of new subscribers it expects by mid-year, in a positive sign for its big worldwide expansion.The company pushed back the next season of its defining hit, "House of Cards", and other programming to the second quarter, which should boost the number of new subscribers in that period, Netflix said.
For the earnings quarter that ended March 31, Netflix added just 5 million members in total: 1.42 million subscribers in the U.S. and 3.53 million subscribers internationally, both of which missed analysts' estimates.
"But Netflix clearly had a vision before those devices became so ubiquitous", the analyst said.
The streaming firm added 4.95 million new subscribers in the quarter, fewer than the 5.2 million it had forecast.
In fact, Netflix turned in a rosier forecast for Q2 than Wall Street was expecting, both domestically and internationally.
"Our viewing is very large and growing, but nowhere near as big as YouTube", Hastings said, in response to a question about how much video its customers watch on Netflix.
Netflix revealled it will spend more than US$1 billion in marketing its content this year as its slate of originals continues to expand, and will up its investment in programmatic advertising.
The Los Gatos, California company now has a market value of about $63 billion. In today's time, its stock has increased from $US1.90 to $149.15. In the first quarter Netflix was reported to have 98.75 million subscribers but this weekend will finally bring glad tidings for the site.
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Amazon has had success with original programming like The Man in the High Castle, Transparent and Mozart in the Jungle, but hasn't been able to win over the water cooler conversation that Netflix has been able to do with Orange is the New Black, House of Cards and their Marvel shows. Netflix's subscriptions range from $8 to $12 per month, with the most popular option at $10.
The model works from a customer viewpoint because it is such a great value, Pachter said.
He said Netflix is also dealing with other competitive forced.
Netflix hasn't given any inkling it will raise prices again. The surge in subscribers of US-based Netflix comes after it invested heavily in overseas markets.
Hastings also addressed the issue of market saturation, citing YouTube's announcement in February about users racking up more than 1 billion hours of video viewing every day.
On Monday, the company reported that its Q1 2017 streaming revenues surpassed $2.5 billion.
But if it wants to keep investors happy, the company will eventually have to improve its relatively low profit margin.
However, Netflix forecast 3.2 million more in the seasonally slow second quarter, well ahead of analysts' estimate of almost 2.4 million.
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