Apple, Disney a big threat to Netflix after low performing Q3
The company’s stock dropped about 30 per cent below its peak price of $423.21. But, still the share prices increased by about 10 per cent.
Netflix continues to fall into a deep slump of decreasing followership and revenue. The US-based online streaming service on October 16 released its third-quarter results.
The company added 6.8 million subscribers worldwide during July and September as compared to the expectation of 7 million. Out of these, the number of US subscribers stood at 520,000 although it was expected to be 800,000 for the period. The loss of 123,000 subscribers during April-June earlier this year is expected to be the reason behind this shortcoming.
The company’s stock dropped about 30 per cent below its peak price of $423.21. The share prices increased by about 10 per cent as investors were expecting a bigger slump in the third quarter.
Netflix is expecting to add 7.6 million subscribers worldwide in the final three months of the year. During the same period a year ago, it aimed for 8.8 million subscribers.
The company is expecting tough competition from the two emerging online streaming services of Apple and Disney. The US is a 12-year-old market for Netflix with one of the strongest subscription bases.
The new streaming service starting from Nov 1 by Apple is priced at $5 per month. The Disney subscription will cost $7 per month and is starting from 11 November. Netflix costs around double that with subscriptions starting from $13 per month.
Michael Pachter, a Wedbush Securities analyst says, “Netflix is going to lose 50% of its most-viewed hours during the next two years. As that starts to happen, subscribers are going to start to notice and some may start looking elsewhere.”
Another big threat looming for the company is its huge debt of $12 billion. It has been borrowing money to pay for its programming. This also doesn't allow it to cut prices.
Netflix CEO Reed Hastings says, "US price increase imposed earlier this year is causing some current subscribers to cancel the service and perhaps causing some prospective customers to shy away." He also added, “What we have to do is just really focus on the service quality, make us must-have.”