Tuesday, December 6, 2022

Netflix’s Moderate Growth Numbers Cast A Cloud Over The Streaming Industry

In a video interview with investors last week. The Netflix Inc. Executives reassures them that the company’s long-term prospects for streaming media were still good, with its popular show “Bridgerton” returning for a second season and a science-fiction movie with Ryan Reynolds coming soon. However, the stock fell. 

Netflix’s stock went down more than 20%, putting a dark cloud over the entertainment business. Wall Street analysts and the company’s own employees couldn’t figure out why the world’s most popular streaming service predicted slow growth for the first three months of 2022, when many people thought the company would be back to making steady, pre-pandemic gains. 

The Netflix CFO, Spencer Neumann, says it’s hard to say why the company’s acquisition hasn’t been able to get back to its pre-Covid level. After 2 years of a global pandemic that we’re not yet out of, there’s still a lot of Covid overhang. There’s also macroeconomic strain in some parts of the world, like Latin America, in particular. 

Stocks of media and tech companies that have spent a lot of money on streaming, like the Walt Disney Co (DIS.N), ViacomCBS, and Roku (ROKU.O), all fell in the after-hours market. 

Netflix expects to add 2.5 million new subscribers in the first three months of this year. That’s about two-thirds of the 4 million new customers it added in the same period last year. Analysts on Wall Street said that more competition and a slower-than-expected return to normalcy after the pandemic could be to blame. 

Jeff Wlodarczak, an analyst for Pivotal Research Group. He said Netflix and other services that gained subscribers during the pandemic lockdown in early 2020 are having a hard time getting back to normal. This includes Disney+ and Peloton. 

He said, “Streaming is not over. It is going to be a thing in the future”. “And today, streaming is still only a small part of global TV viewing.” 

The co-Ceo Ted Sarandos claimed that “We did not see a drop in our engagement, We did not see a drop in the number of people watching.” In his opinion, all of the things that would usually make them look at their competition didn’t happen. 

Rival services, like Disney’s Disney+, WarnerMedia’s HBO Max, and Amazon Prime Video, are spending billions of dollars on content to try to get people to sign up. 

This is what Mike Proulx, the vice president of research for Forrester, wrote. “The truth is that the streaming market has become full”.  A lot of people worry about the total cost of their streaming subscriptions. This gives them more options. 

90% of Netflix’s growth is expected to come from outside its home market. Analysts are closely watching how Netflix’s most recent price rise. That is increasing the cost of a monthly subscription to $15. It will affect the number of people who subscribe in the United States and Canada. 

Analyst Joe McCormack from Third Bridge. He says that it will be important to see if Netflix can keep its subscribers at the same rate as before. “As we head into 2022, many believe that streaming video subscribers will be saturated,” McCormack says. 

Reed Hastings, the co-founder of Netflix, told investors that there’s still a lot of room for growth as streaming gradually replaces traditional TV over the next decade or two.  He said that for the time being they are keeping their calm.

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Harshaurya Kaur
Harshaurya Kaur
Tech enthusiast, content writer but a wanderlust sufferer at heart. A good book along with a cup of coffee is her ideal happy place.
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