Netflix earnings surpass expectations, but competition heats up

19 Apr 2016

Following its near-global expansion towards the end of last year, Netflix’s earnings report for this quarter has surpassed expectations, but its dominance is now under threat like never before.

Now available in more than 130 countries, Netflix can easily say it has established itself as the dominant TV and film content-streaming service in the world – aside from YouTube – and its latest earnings report would appear to confirm this.

According to its release, the company’s quarterly revenues amounted to $1.96bn for the quarter, a jump from a year earlier when it generated $1.57bn.

This just missed market analysts’ predictions, which had estimated its revenues to be $1.97bn, but its earnings per share came in at 6c, which did exceed the expectations of analysts surveyed by  Thomson Reuters.

It is increased its subscriber numbers too, perhaps unsurprisingly given its spread to so many countries.

Amazon to undercut Netflix price

In total, Netflix said it has gained 6.74m net subscribers, 4.51m of which were generated internationally.

This far exceeded estimated numbers by market analysts, who had expected a net total of 4.36m with 1.77m added subscribers in the US, compared with the 2.23m it actually achieved, putting Netflix’s total subscriber numbers at more than 81m worldwide.

However, its shareholders are not feeling as confident as the company’s co-founder and CEO, Reed Hastings, with the company’s shares dropping 12pc in after-hours trading, according to CNBC, due to more muted subscriber growth being predicted for Q2.

Netflix is also very much aware of the increasing competition, especially given Amazon’s recent announcement that it is to undercut Netflix’s $9.99 per month by charging the lower price of $8.99 per month.

Deflecting any fears that the company’s position as top dog was under threat, Hastings said in response to a question about Amazon: “There are so many competitors and everyone is working hard to build the best content, and so we’re seeing growth in the overall internet TV market … and it’s natural that everybody is coming in as they realise that the future is internet TV.”

Netflix on phone image via Fotos593/Shutterstock

Colm Gorey was a senior journalist with Silicon Republic