Netflix admits competition is hurting its growth
Netflix Inc NASDAQ: NFLX acknowledged that heightened competition may have an impact on its growth but the admission can hardly be described as forthright.
What is a Sly Admission? In its fourth-quarter letter to shareholders, the streaming video on demand company wrote that consumers have always had many choices when it comes to their entertainment time - competition that has only intensified over the last 24 months as entertainment companies all around the world develop their own streaming offering.
Netflix appeared to have admitted that the SVOD segment has lots of players like Walt Disney Co's NYSE: T HBO Max, Comcast Corporation NASDAQ: CMCSA owned Peacock and Viacom CBS's NASDAQ: VIAC The Heat Is Global: Even though we are optimistic about our long-term growth prospects, we are optimistic about our long-term growth prospects, the company said in its shareholder's letter.
Competition around the world is only likely to intensify in the near future. On Wednesday, Disney CEO Bob Chapek announced the creation of an International Content Group that will function under the newly appointed Rebecca Campbell.
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Chapek touched on Campbell's appointment and said she would bring in her expertise and talent to oversee the growing pipeline of original local and regional content for our streaming services while continuing to lead our international operations. After Netflix found great success with Squid Game, Apple Inc. NASDAQ:AAPL is turning up the heat in local Korean content. The SVOD platform operator appeared to believe that there is plenty of sea for multiple fishes in its shareholder's letter.
It reinforced that point by pointing out that streaming still accounts for less than 10% of TV screen time in the United States, its biggest market.
The transition from linear to streaming is the biggest opportunity in entertainment, with under 10% of total TV screen time in the US, our biggest market, Netflix has tremendous room for growth if we can continue to improve our service, the company said.
The subscription prices were raised by $1 to $2 per month in Canada, its biggest market. A Netflix basic plan that costs $8.99 now costs $9.99 per month.
The price increases even as competition intensifies, which could be seen as a sign of confidence as far as customer retention goes.
Netflix Q 4 Numbers And Beyond reported revenues of $7.71 billion, which was less than estimates. Earnings per share were $1.33 in the period, beating estimates of 82 cents per share.
The first-quarter guidance of $2.86 per share is less than the estimate of $3.45 per share. Revenue guidance was $7.903 billion compared to an estimate of $8.08 billion for the period.
Price Action: On Thursday, Netflix shares plunged 20.22% to $405.50 after-hours trading. The shares closed the regular session down 1.5% at $508.25.
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