By Al Edwards
Streaming giant Netflix shook off its Q2 blues to report revenues of $5.24 billion in Q3 which was in line with expectations of $5.25 billion.
This spelt a 31 per cent increase year on year. GAAP earnings per share (EPS) came in at $1.47, a healthy increase on estimates of $1.05.
Netflix has recently increased its subscription fee in the United States and that may have hurt its paid net additions there which came in well below forecasts of 800,000 for the quarter under review, registering an anaemic 500,000.
This is ominous in so far as Netflix is facing an onslaught from a slew of competitors including Apple TV + (launch date-November 1), Disney + (launch date-November 12) with next year seeing HBO Max and Peacock joining the party.
Already Amazon, Hulu and Roku are taking market share.
But Netflix has an answer to that saying in its shareholder letter for Q3: “While the new competitors have some great titles, none have the variety, diversity and quality of new original programming that we are producing around the world.”
“This year Netflix will be spending $15 billion in cash to buy original content. “
Netflix CEO Wilmot Reed Hastings was sanguine on the spectre of competition, commenting, “ The launch of these new services will be noisy. There may be modest headwind to our near term growth and we have tried to factor that into our guidance. In the long term though we expect we’ll continue to grow nicely given the strength of our service and the large market opportunity.”
Netflix continues to do well globally and recovered from a fall off in its international subscribers in Q2 to be ahead of forecasts for Q3, posting net adds of 6.3 million. It has scored big with non-English originals and one of its movies in that category; Roma won an Oscar earlier this year.
Notably Netflix has lost some TV favourites like “Friends” but is doing extremely well with its in-house content like “Orange Is The New Black ” and “Stranger Things.”
This year Netflix will be spending $15 billion in cash to buy original content. It is able to do so because of its large subscriber base, revenues and cash flow which it continually reinvests in content.
The streaming company, which has changed the way television is consumed, now has 158.33 million subscribers worldwide.