from the still-growing-but-not-[as]-fast-[enough] dept.
Netflix shares plunged by more than 14% in after-hours trade on Monday, after the firm reported disappointing subscriber growth.
Netflix said it added 5.2 million subscribers in the three months to the end of June, the same number it did during the period last year.
The streaming service had forecast growth of 6.2 million.
The decline in share price follows a successful run for the stock, which had roughly doubled so far this year.
Is the number of Netflix subscribers reaching a plateau based on its current library of titles, or are competitors eating into its growth?
Related Stories
Netflix burns cash at a record pace, but investors love it
In its third quarter earnings statement on Tuesday, the company reported negative free cash flow of $859 million, the biggest figure in its history. Netflix continues to increase spending on original content as it seeks to compete with other players like Hulu, HBO and planned streaming services like Disney's, scheduled for next year. Netflix will reportedly spend at least $8 billion on content in 2018.
It would be a shame if someone were to pirate or illicitly stream that content.
Netflix has criticized the EU's local content quotas:
Netflix used its third quarter earnings report to criticize the European Union over a new content quota for streaming services. The EU, writes Netflix CEO Reed Hastings in the report, is "currently rewriting its audio visual rules" that will demand streaming services like Netflix "devote a minimum of 30 percent of their catalog to European works." Netflix's report acknowledged that catering to a specific audience encouraged more regional original programming for international audiences, but suggested that enforcing quotas on a streaming service could have unwanted negative effects.
Netflix is already set to spend $1 billion on European content this year.
Also at MarketWatch.
(Score: 4, Insightful) by The Mighty Buzzard on Wednesday July 18 2018, @08:43AM (19 children)
Or maybe it has a finite potential customer pool and expecting subscriber numbers to grow like they have forever was foolish beyond belief. Regardless, competition in the space is a good thing; having NetFlix grow to capture their entire market would be astoundingly bad. Worse even than exclusive deals on content.
My rights don't end where your fear begins.
(Score: 1, Interesting) by Anonymous Coward on Wednesday July 18 2018, @10:27AM (10 children)
The one, basic fact that "business"-educated people never ever get, although it should be painfully obvious to _anyone_: eternal growth is impossible.
And yet, they're all totally surprised each time the growth ends. And they learn nothing from it. Like a moron running head-first into a wall time after time because he wants to be on the other side.
Now if they could just stop ruining all our lives in the process of their quixotical quest ...
(Score: 2) by JoeMerchant on Wednesday July 18 2018, @10:36AM (9 children)
As long as population keeps growing, so can business...
Me, personally, I think population passed its max comfortable level about 40 years ago, but as long as we keep adding consumers, business can grow to serve them.
🌻🌻 [google.com]
(Score: 3, Informative) by theluggage on Wednesday July 18 2018, @11:10AM (4 children)
As long as wealthy population with access to your product keeps growing, so can business...
Oh, plus, the population can't sustain infinite growth either - if it keeps growing, bad things will happen (like, higher proportions of the population living in poverty and not being able to afford to stream The Crown). Don't get complacent just because we're not eating people yet.
Oh, plus, you have to make more and more money to feed the parasites (like, you know, the shorters who make money for nothing when there's an insignificant blip in the share price which is still up 70% on a year ago and which will probably shoot up again when Stranger Things 3 comes out).
(Score: 2) by JoeMerchant on Wednesday July 18 2018, @02:15PM
We're not far off. Watch Chasing Coral (available on Netflix :-) if you want to be really depressed about the present and likely future of the environment.
🌻🌻 [google.com]
(Score: 2) by JoeMerchant on Wednesday July 18 2018, @05:00PM (1 child)
Well, I know a certain 86 year old woman who gets $500 per month from Social Security, and her 56 year old daughter who is a full-time live-in caregiver, basically sponging off of the paid-for mobile home and mom's SS check...
On that "wealthy" backdrop, they get high speed internet for $10 per month, and could afford $7.99 per month for streaming, but there's a relative with the "premium" two streams Netflix account at $10.99 per month who shares his password with them.
If you're wealthy enough to have a roof over your head and any kind of TV screen, you're wealthy enough to subscribe to Netflix.
🌻🌻 [google.com]
(Score: 1, Interesting) by Anonymous Coward on Wednesday July 18 2018, @05:49PM
I doubt that, especially considering the latest SIPP results. Only 78% of trackable households (those with a roof over their heads, among other permanence criteria) owned a computer, less than 70% a dishwasher, and 85% a clothes washer (and less own a dryer). Additionally, 10% live in a place with a "chronic" pest problem. A similar number had at least one utility disconnected, over 20% are without access to air conditioning. That doesn't even cover food and other "essential expenses" insecurity. I'm pretty sure that many of the people above would rather have what they are missing, rather than a Netflix subscription.
(Score: 1, Funny) by Anonymous Coward on Wednesday July 18 2018, @08:13PM
Stating 'we' is a bit presumptuous. Speak for yourself.
(Score: 2) by requerdanos on Wednesday July 18 2018, @04:48PM (3 children)
The growth that you speak of that's possible if the potential customer base grows with the population is not the growth that the business forecasters who are now apparently disappointed and surprised speak of.
They are talking about a continued, sustained growth rate that keeps pace with the growth has been occurring for some time.
You're talking about a reasonable, rational, reality-based growth rate that's much slower (and more sustainable) than what they are talking about. Because the reality-based one is slower, they count that one as "not growth" in the comparatively fast sense that they were talking about.
To my way of thinking, services like netflix have plenty of room for that faster growth if two conditions are met:
I am pretty sure these two conditions still exist, providing the strategy of taking customers (#2) away from competition (#1), but I don't think my way of thinking much resembles their way of thinking either.
(Score: 2) by JoeMerchant on Wednesday July 18 2018, @04:54PM (2 children)
Netflix's growth to-date has been ridiculously astounding, to expect it to continue like that forever is foolish. I agree, they will most likely rebound from the current setback and continue to grow "fast" in the future.
They basically combined "free bandwidth" of the internet with the killer bandwidth app: video entertainment, and managed to dominate the market.
🌻🌻 [google.com]
(Score: 0) by Anonymous Coward on Wednesday July 18 2018, @06:19PM (1 child)
What "rebound" are you talking about? They grew this quarter JUST AS FAST as they did in the same quarter last year.
The idiots on wall street are bitching because it didn't grow FASTER.
(Score: 2) by requerdanos on Wednesday July 18 2018, @07:34PM
So, if their growth did not grow, but only remained the same, THAT'S STAGNATION! I guess. Growth has to be growing for the growth to be growth. A slightly smaller growth rate, see, would be a SHRINKING growth rate, and everyone who forecasts for businesses and stock bettors and bookmakers knows that shrinking is bad for growth.
(Score: 4, Interesting) by Marand on Wednesday July 18 2018, @01:22PM (7 children)
I agree about preferring real competition to a monopoly, but Netflix is still something of an outsider/underdog in this space. One likely reason it's struggling to maintain growth is because its streaming content selection is being artificially limited by IP owners like Disney and BBC* pulling some or all of their content from Netflix, presumably with aspirations of starting their own walled-garden streaming services where they keep all the profit. Even when companies are playing ball and licensing content to Netflix they're pulling all sorts of weird shenanigans to undermine it, like removing entire seasons of television shows, or abruptly pulling movies and series, plus many only allow Netflix to stream older content. It's unfortunately working, too, because one of the most common complaints I see against Netflix is this lack of content, with the blame misplaced on Netflix instead of the rights holders.
If they get their way, we'll be separate premium subscription rates for each provider's walled-garden of content instead of paying a cable-esque middleman like Netflix. For some companies this is just speculation, but Disney, one of the biggest (if not the biggest) entertainment conglomerates has already announced it's ending its Netflix deal [collider.com], and in its place will launch two separate streaming services [nytimes.com] people will have to pay for. On top of that, their acquisition of Fox was recently approved [nytimes.com], which means even more content falls under their banner and will likely disappear from Netflix in favour of their own service.
This mirrors a similar shift that's been happening with video game industry, which was quicker to adopt online distribution than the television and film industry but slower to fragment, so that for a long time Steam had no competition and is still currently the biggest player. In response, game publishers started creating their own services, trying to avoid giving Valve a portion of their profits, but they took the same walled-garden approach, only selling products from their own catalogue. So, instead of being able to buy products from different publishers in a single marketplace, users now have to deal with a bunch of individual launchers and storefronts. EA was first to do this with Origin; once Origin was running, new games stopped appearing on Steam and started requiring the installation of Origin on the end-users' PCs. Blizzard never sold through Steam but otherwise took a similar approach as EA, rebranding its battle.net matchmaking system into a "social" platform and storefront that only sells its own games, banking on being big enough that everyone will just suck it up and deal with it. Epic has recently started doing the same, too, with its "Epic Launcher" that is required for games like Fortnite. Curiously, Ubisoft is the odd man out here: it has its own service and store, but still puts products on Steam for purchase. Using their products still requires using their custom service, but so far they've avoided the heavy-handed "buy through our storefront or get fucked" approach the others have.
Anyway, the point I'm getting at here is that, while I would love to see actual competition in these spaces, it doesn't seem like that is what's happening. The weakening of companies like Netflix and Steam looks likely to be worse for the consumer, because it's happening as a strategic move from IP owners trying to tighten their control over their content and squeeze even more money out of consumers.
* BBC is a weird case. They don't have a competing service yet, but they've already pulled some of their biggest content, like Doctor Who, leading to speculation that they plan to offer a similar paid streaming service. Meanwhile, they're still licensing other things like Peaky Blinders exclusively to Netflix.
(Score: 2) by takyon on Wednesday July 18 2018, @02:17PM (3 children)
BBC has already laid some of the groundwork with iPlayer.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 2) by Whoever on Wednesday July 18 2018, @03:22PM (2 children)
... and now Britbox.
(Score: 2) by takyon on Wednesday July 18 2018, @03:46PM (1 child)
Don't think I'd heard of it before you mentioned it.
https://en.wikipedia.org/wiki/BritBox [wikipedia.org]
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 2) by Whoever on Thursday July 19 2018, @03:46AM
If you want to watch British TV programs and are in the USA or Canada, there is also Acorn.tv.
(Score: 2) by Phoenix666 on Wednesday July 18 2018, @03:56PM (2 children)
How much do advantage do competitors like Disney and HBO have over Netflix, though? They have old catalogues of content, but older viewers have already seen all that stuff a million times in scores of ways. Newer viewers have never heard of that stuff and don't care. It's the new hotness people care about, and if Netflix is producing more of that, faster, and winning the awards to prove it's just as good as any other producers', then they will still win the race.
Netflix has been burning cash with experimental original content. That part is true. On the other hand, they have analytics like no other content company ever before, or even still, so they know exactly how many people watch a new bit of content, exactly when during a show people stop watching, exactly what sorts of moments customer A tends to abandon an episode or series, and so on. Because of all that they have a much, much greater finger on the pulse of today's content consumer than practically any other player out there, with the possible exception of Google.
That, I would argue, gives them a huge competitive advantage. If they press that advantage and lure away all the top talent in the creative community, as they have been, then even companies like Disney will have a tall mountain to climb before they can knock off the king of the hill.
To do that, I suspect that a new player would have to invent a new way of interacting with content, the way that Netflix invented binge-watching. Perhaps interactive content could do it, but that's an entirely different way of thinking that would probably be better suited to a Dungeon Master than a traditional producer.
Washington DC delenda est.
(Score: 1) by oldmac31310 on Thursday July 19 2018, @02:15PM (1 child)
Netflix did not invent binge watching. Where did you get that silly notion?
(Score: 2) by Phoenix666 on Thursday July 19 2018, @02:25PM
They did invent it in its current form, as in, very easy. Before you had to buy DVD box sets or get boxes and boxes of VHS to do it, and then you had to get up and manually switch out the media. Before those, sometimes they ran marathons on TV like for James Bond movies, but they'd take 18 times longer to watch than the runtime of the actual show because of all the commercial breaks they interlarded it with.
But laying on your sofa, letting the streamed episodes automatically roll over, one to another to another, is definitely a Netflix innovation.
Washington DC delenda est.
(Score: -1, Offtopic) by Anonymous Coward on Wednesday July 18 2018, @08:58AM (1 child)
Good article with nice post. Very helpful. Keep posting more. Read more
office it support in Japan [spsysnet.com]
(Score: 2, Offtopic) by realDonaldTrump on Wednesday July 18 2018, @01:57PM
@trends we know it's you. Believe me, we know. But, thank you for the link and good luck!!!!
(Score: 1, Interesting) by Anonymous Coward on Wednesday July 18 2018, @10:00AM (2 children)
Netflix is a company co-founded by a nephew [wikipedia.org] of Edward Bernays [theconversation.com] with Obama's national security advisor on the board [variety.com] and millions
pump and dumpinvested by George Soros. [investopedia.com] It's just entertainment [activistpost.com] they say.With their current "original content" business model, the bigger netflix become, the more money they'll lose. [sovereignman.com]
(Score: 2, Funny) by realDonaldTrump on Wednesday July 18 2018, @02:07PM
George Soros said something so interesting. He said possibly he's done with the Dems. And he said Obama was a HUGE DISAPPOINTMENT for him. The guy only called George once, an 8 minute phone call. 8 minutes in 8 years. Sad!!!! foxnews.com/politics/2018/07/18/george-soros-calls-obama-greatest-disappointment-says-doesnt-particularly-want-to-be-democrat.html [foxnews.com]
(Score: 2) by DeathMonkey on Wednesday July 18 2018, @06:40PM
1: the newphew
2: Edward Bernays' sibling
3: Edward Bernay
4: Susan Rice
5: Obama
6: Who's worse than Soros?? KEVIN BACON!
(Score: 2) by ledow on Wednesday July 18 2018, @12:06PM (5 children)
Meanwhile:
https://www.bbc.co.uk/news/entertainment-arts-44862598 [bbc.co.uk]
"Video streaming services such as Netflix and Amazon Prime now have more subscribers than traditional pay TV services in the UK, new data from Ofcom has revealed."
(Score: 2) by isostatic on Wednesday July 18 2018, @01:15PM (3 children)
Nearly 40% of UK households now subscribe to Netflix, Amazon Prime or Now TV. The 15.4 million subscriptions have now passed the 15.1 million who pay for Sky, BT, Virgin and other satellite/cable providers.
40% of households is 10.8 million houses. I supsect many households (like mike) subscribe to both Prime and Netflix. I doubt many subscribe to Sky *and* Virgin. What percentage of households have Sky, BT (tv) or Virgin?
(Score: 2) by ledow on Wednesday July 18 2018, @01:29PM
Dunno but I'm not any of the latter.
I get my broadband via 4G. I have iPlayer, Amazon Prime and Netflix. Also TVPlayer on a promotion (data on it doesn't count towards my usage), so I can watch "live TV".
Fact is that people are willing to pay JUST for video services that Sky, Virgin et al aren't fulfilling.
Project Kangaroo (the end result of which would have been "iPlayer" for all the terrestrial UK channels) was a great idea and would have owned the UK market, but never happened because of in-fighting, leaving the way for something completely foreign to walk in and steal all the viewers (where does Netflix profit end up in terms of UK tax?).
Well done BBC, Channel 4, and everyone else. Way to justify the licence fee.
(Score: 0) by Anonymous Coward on Wednesday July 18 2018, @02:18PM (1 child)
We have but I've not watched in years - the last time I was unfortunate enough to catch anything on TV was back in February while visiting friends. Seriously overpriced for awful, low quality programming only one person in the family even makes use of.
(Score: 2) by isostatic on Thursday July 19 2018, @08:03AM
So you pay for Sky, but don't watch it?
(Score: 2) by FatPhil on Wednesday July 18 2018, @03:00PM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by Revek on Wednesday July 18 2018, @12:29PM
Gearing profits toward unlimited growth will eventually hit a wall. Why don't they plan to be around for a while and work on getting new content people actually want to watch.
This page was generated by a Swarm of Roaming Elephants
(Score: 2) by canopic jug on Wednesday July 18 2018, @02:01PM (1 child)
They write of growing subscribers, but underneath that they're burning money like it's going out of style. The article somehow claims a profit but from the earnings releases, they show a negative cash flow in the billions [fool.com]. So many of these companies are not viable. Some, such as Uber, are living almost exclusively on venture capital. If the goal is not to earn money, then one does have to ask what these companies are really about? With Uber, it is to start collapsing various labor markets, starting with taxis. With Netflix, maybe it is about establishing universal DRM and finally putting an end to general purpose computing and an open Internet.
Money is not free speech. Elections should not be auctions.
(Score: 4, Interesting) by VLM on Wednesday July 18 2018, @04:03PM
... bread and circuses?
Not entirely crazy. Yeah we know you don't make money, but we'll leave you alone in your financialization bubble scheme as long as you keep the propaganda pushing and the proles entertained...
Some of the numbers are bizarre if you rub multiple articles together against each other. Apparently total subs divided by total hours streamed daily is darn close to 1. If the average subscriber really does watch roughly sixty movies per year, thats roughly 120 hours of viewing movies out of 365 hours of viewing, such that a little subtraction shows the average viewer watched about 200 hours of TV. So... I tried starting several TV series, Sopranos, B5, a couple others, and just couldn't work up the motivation to put dozens of hours into them "until they get good", and the general impression is streaming subscribers binge watch lots of series, but at only 200 hours per year, the average sub binge watches maybe one series per year, it just doesn't work out mathematically otherwise.
Apparently there is no such thing as the one show that all netflix viewers watch. Per some clickbait I found in some google searches, "Stranger Things" is the second best show available on netflix and has clickbait story titles like "Is the most popular streaming show of all time" and so forth. HOWEVER only 8.8 million out of over a hundred million subs has watched it. Netflix does seem to be very much like legacy TV in that 95%+ of people do NOT watch any given show, although clickbait implies "everyone" watches some shows.
There is no cultural heritage in mass media anymore, which is just weird to think about for older people.
My wife's friend implied Netflix costs $14/month regardless how many people live in the house, so $168/yr for average 60 movies is $3/movie. Movie prices in theaters are all over the map, on "date night" with my wife its $14/person but my son is literally at a movie right now with a friend and during summer in inconvenient hours they charge a mere $3/person. Obviously you can watch a netflix movie anytime you want, but I was surprised that its possible to spend about the same amount of money at a theater or at home. Of course its usually cheaper at home, especially if you have many people over and don't pay $20 for a bucket of greasy popcorn.
Some more semi-subversive math... I subscribe to Amazon Prime because I need the free shipping, although with a mere 85 million of my friends. Needless to say, Prime give me free streaming and is roughly as popular as Netflix despite gaslighting that "everyone has netflix no one uses prime" and there's more crap on prime than I am interested in watching so I'd never subscribe to netflix. Anyway the point I'm trying to make is there's probably not a lot of overlap between netflix and prime subs because why would anyone waste the money on both? Leading to the top to streamers having roughly 200 million subs worldwide. Which has interesting implications, there's only 125 million households in the USA. Of course, there are, I'm sure, many international subs of both services.
As a side dish its hard to imagine why a household would have more than one netflix account, and google claims 58M netflix accounts in the USA, so there's no way netflix can grow a bit more than double, without forming more households in the USA. You can expect growth rates like 10x per quarter at a very small SV startup, but netflix is already so large it can never mathematically grow more than 2 times larger than it already is.
Interesting meta observation: We're in a full on bubble economy for a generation or two now. There's nothing any Americans as a group have in common, certainly not culture or anything OTHER than being in massive economic bubbles. What makes an American an American clearly isn't belief in the laws or constitution or any shared ethical / moral values or shared culture or shared religion or shared race... all that is still holding the country together as a unit is shared economic bubbles. What a strange dystopic "cyberpunk"-esque way to organize a civilization. The only way to recognize us from them is to see if they're also into housing or SV stock speculation.
(Score: 0) by Anonymous Coward on Wednesday July 18 2018, @03:56PM (1 child)
The actual movie content is SO limited. I'm not one to sit and binge watch tv shows, which seems to be what they are devoted to. I wanted to show my teens kids some movies from my child hood, but guess what? Netflix doesn't have Breakfast Club or Ferris Bueller! I was amazed. How can they call themselves a movie site without any of the classics?
(Score: 0) by Anonymous Coward on Thursday July 19 2018, @02:11AM
The point is valid. The 80s brat pack specifics notwithstanding.
(Score: 1) by doke on Wednesday July 18 2018, @04:27PM
Maybe people are afraid the loss of net netrality in the US will soon increase streaming service prices?
(Score: 3, Informative) by JoeMerchant on Wednesday July 18 2018, @05:12PM (1 child)
Thanks to this story I took a look at my Netflix account to see what plan we have... discovered that we had a $7.99/month disc rental option on our plan that we hadn't utilized in over a year... welp, that's embarrassing... and it's turned off now.
If we had any kind of consumer protection in our society, unused service vampires like that would be illegal.
🌻🌻 [google.com]
(Score: 0) by Anonymous Coward on Wednesday July 18 2018, @05:25PM
I just hold on to my dvd for months before watching. I may cycle through 3 a year for the mail service.
(Score: 2) by bob_super on Wednesday July 18 2018, @07:25PM (2 children)
They ONLY grew by 4%, instead of 4.7% !!!
Only 5.2 million more customers, like the same quarter last year, not a million extra growth on top of the growth !!!
How dare they miss their guidance ????
DOOOMMED!! They are DOOMED!, I tell you! Sell, sell, sell !!!
(I contend they are doomed by the end of Net Neutrality, and will get bought by one of the big guys, but this is amazingly silly "news")
(Score: 1, Insightful) by Anonymous Coward on Wednesday July 18 2018, @10:26PM
I'm not sure what you're calling silly. As you point out, what happened was that it's growth acceleration was 0; it still grew and grew at the same velocity as previously measured. And yet investors undies are in a bundle because of it. That's the news here and the consequences of it are anything but silly. I'm having a hard time coming up with any explanation for the reaction that doesn't make me shake my head at the state of mind of investors in US and its implication for our present and future.
(Score: 2) by takyon on Thursday July 19 2018, @03:57AM
Universe Stars Crunch as Expansion Growth Rate Stalls
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]