Signs of weakness despite everything
However, the growth of the world leader in video streaming shows signs of weakness. In detail, Netflix has more than 158 million subscribers worldwide (+ 21% over one year). A performance well below the forecasts of analysts, who expected more than 161 million paying users. For the whole of 2019, the group hopes to gain 26.7 million subscribers worldwide, against 28.6 million in 2018. For the first time, the growth of its subscribers could be lower than that of the previous year.
In the United States, its most mature market, Netflix will not even have gained 4 million paying users over a year. In the latest results, the group recorded a loss of subscribers in its home market (-130,000) for the first time since 2011, when the company separated its DVD rental and streaming business.
"Since the rise in prices in the United States this year (with offers ranging from $ 8.99 to $ 15.99 per month, Editor's note), the retention has not yet fully recovered its level before the price change. , which has led to a slowdown in the US market, "admits the group in its letter to investors.
"On the basis of more than 60 million subscribers in the United States, very small churn can have a significant impact, but revenue growth has accelerated and Average Income Per User (ARPU) average income per subscriber, benchmark, ed) rose by 16.5% year on year. "
$ 15 billion dedicated to content in 2019
While 2019 will be a bit of a drag on Netflix's growth, this dynamic third quarter allows Netflix to enter the video streaming war with some confidence.
As of November, new trucks will appear on the market. Giants Disney and Apple will launch their offers, at broken prices. Will follow from 2020 the launch of HBO Max, by the studio WarnerMedia, and Peacock, by NBC Universal, each with a huge catalog of popular series and movies.
To attract massively subscribers, platforms are already engaged in a war of content. Each service relies on the production of own content, but also seeks to offer popular franchises to diversify its catalog.
This is why Netflix is working hard, with a budget of about $ 15 billion dedicated to content in 2019. A figure that has tripled in just three years. It must be said that the group sees its catalog stripped by competition: the series Friends will return to WarnerMedia for HBO Max, The Office returns to NBC Universal, not to mention Disney, which recovers Marvel, Pixar and Star Wars productions. Netflix will have to compensate with its own productions.
"We are turning more and more towards the production of original content because of the anticipated withdrawal of content from the studios, but also because our original content works in terms of audience and commitment", writes the group in its letter to investors, before taking as an example the last season of Stranger Things. Released during the third quarter, the last season "is the most watched so far, with 64 million views in the first month of uploading", welcomes Netflix.
His real opponent? Traditional TV, according to Netflix
To develop internationally, the group wants to continue to focus on local productions, that is to say content shot in the languages of the target countries. "To date, we have released 100 seasons in languages other than English, in 17 different countries, and we plan to produce 130 more in 2020"says the group. Forced to quickly reshape its catalog, Netflix no longer hesitates to eliminate in the first season series deemed uneconomic.
However, Netflix wants to be confident in the influx of new offers.
"Today, we expect to account for less than 10% of screen time in the US (our most mature market), and far less than that on mobile." Many are focused on "the streaming war," but we we are competing with platforms (Amazon, YouTube, Hulu), as well as with traditional television for more than a decade, "says the group.
"The arrival of new services like Disney +, Apple TV +, HBO Max and Peacock will intensify the competition, but we stay small in front of traditional television (…) This may cause modest headwinds in the short term for our growth. In the long term, we believe that we will continue to grow, thanks to the strength of our service and the opportunities offered by this huge market ", says Netflix.