Netflix’s Dominance Begins to Sluggish as Rivals Achieve

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Netflix continues to rule the streaming universe. As of the end of March, the company had a total of 207.6 million paying subscribers, including around 67 million in the United States, the company found in an earnings report on Tuesday.

However, its main competitors – Disney +, HBO Max, Paramount +, and AppleTV +, as well as old-school streamers Amazon Prime Video and Hulu – have caught the attention of Netflix.

Global demand for original Netflix programming like “Bridgerton”, the much-vaunted romance of super producer Shonda Rhimes, has declined compared to similar offers from newcomers, according to developed data company Parrot Analytics, a metric that not only measures the number of viewers for certain programs but also their likelihood of attracting subscribers to a streaming service.

In its most recent ranking, Parrot reported that Netflix’s share of total demand – a measure of the popularity of its shows – was slightly above 50 percent in the first three months of the year, compared with 54 percent a year ago and 65 percent in the first quarter 2019.

In other words, competitors have started to participate in Netflix’s dominance.

That showed in the numbers. For the first quarter of 2021, Netflix reported four million new customers, less than the forecast six million. The company expects only one million new customers for the current quarter, which ends in June.

Netflix shares fell around 10 percent in after-hours trading on Tuesday after earnings were announced.

The company doesn’t think the newer competitors were the problem.

“Are we sure it’s not competition? Because there are obviously a lot of new competitions, “said Reed Hastings, co-managing director of the company along with Ted Sarandos, on the call to win after the report. “It’s fiercely competitive, but it’s always been like that. We’ve been competing with Amazon Prime for 13 years and Hulu for 14 years. “He added,” So there is no real change that we can see in the competitive landscape. “

Netflix withdrew productions during the pandemic, which has now been added to the release schedule. The company did not have any large series during the reporting period.

“We will return to a much more stable state in the second half of the year,” said Sarandos, citing the return of popular series like “The Witcher” and “You”.

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Updated

April 20, 2021 at 1:25 p.m. ET

Netflix also hiked prices in October, increasing its standard plan by a dollar to $ 14 a month. The premium tier has been expanded by another $ 2, which is now $ 18. The company typically increases its fees roughly every 18 months. Attempts are also being made to curb password sharing, which has long been the practice.

During the same period when the pandemic was underway, the company had a record 15.7 million subscribers last year.

When much of the world was locked down, people turned to screens to pass the hours. Netflix saw a surge in new signups, creating a record year of nearly 37 million additional customers. The company is unlikely to repeat this feat in 2021 as restaurants, shops, theaters and sports stadiums across the country reach full capacity.

But Netflix is ​​an international business. Most of its revenue now comes from overseas and has based its future growth on emerging economies like India and Latin America. These regions have had a surge in coronavirus cases recently, which has resulted in new lockdowns. Most of the world, including Europe, didn’t vaccinate its citizens as quickly as the United States.

Netflix still spends a lot. $ 465 million was spent to purchase two sequels to the hit unit “Knives Out,” a price 50 percent above the gross proceeds of the first film. It’s also ten times the cost of producing the film. Hollywood lit up with chatter. Did Netflix Pay Too Much?

The director of the film, Rian Johnson, came up with the idea for the film, and he and his production partner control the rights. The lucrative deal is in line with Netflix’s expensive advertising for Hollywood creators. There are nine-digit agreements with prolific television producers such as Ms. Rhimes and Ryan Murphy, and actor-producer Adam Sandler. Mr Johnson could join their ranks by creating additional series and films for the company.

Despite Netflix’s endeavors to own content, Netflix recently signed a distribution agreement with Sony Pictures Entertainment, the last major Hollywood studio not tied to a streaming business. Netflix will have rights to a number of Marvel franchises, including Sony-controlled Spider-Man and several offshoots based on the character.

The company posted first quarter profits of $ 1.7 billion on sales of $ 7.16 billion. Investors targeted a profit of $ 1.3 billion on sales of $ 7.1 billion.

In addition, the board of directors approved a $ 5 billion share buyback plan designed to reduce the number of available shares in circulation and potentially make them more valuable.

Despite the competition gaining ground, Netflix is ​​in the best financial shape in history. It reached a milestone late last year when it said it would no longer try to borrow money to fund its content plan. Another way of looking at it: Netflix eventually became a really profitable company after more than 200 million subscribers were paying an average of $ 11 a month.

In other words, the competitors are still losing a lot of money streaming.