Economy

Netflix added record number of subscribers, but warns of tougher times ahead

Netflix added record number of subscribers, but warns of tougher times ahead

It's the most subscribers that Netflix has gained during any three-month stretch since the Los Gatos, California, company unveiled its streaming service 12 years ago. That was below the 5.48 million consensus of industry analysts surveyed by FactSet.

However, when you add in that all of that content from those cable channels and movies will also be appearing on the new Disney+ streaming service and potentially attracting new viewers, the price begins to be paid back that much faster with every new subscription to the service.

Investing.com, senior analyst Haris Anwar, said investors are nervous because there are indications of a slowdown in the Q1 subscriber growth.

Disney is a proven product, but Apple original content remains untested.

Meanwhile, Raymond James analyst Justin Patterson adds that Netflix's record number of new subscribers for the first quarter shouldn't be overlooked.

Further demonstrating the importance of unscripted to streamers, Netflix also said that more than 20 million subscribers had watched Fyre: The Greatest Party that Never Happened, the festival-focused doc from Emmy-nominated director Chris Smith.

Competition may not be significantly higher in the second quarter, but it is likely to grow in the third and fourth quarters of this year.

Now, it should be noted that while Disney showed plenty of footage to the people in the room at its big Disney+ reveal, most of those trailers weren't streamed to the ordinary folks watching via webcast.

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"We don't anticipate that these new entrants will materially affect our growth because the transition from linear to on-demand entertainment is so massive and because of the differing nature of our content offerings", the Los Gatos-based streamer said.

Netflix seems fairly nonchalant about the arrival of TV services from Apple and Disney.

Profit in the first quarter of 2019 rose to $344 million from $290 million in the first quarter of previous year. At $6.99 per month, Disney holds a distinct advantage over other streaming services. The service is looking to increase its subscriber base in India, a market flooded with video streaming offerings that are substantially cheaper than Netflix's offering.

Total revenue rose to $4.52 billion from $3.70 billion.

More than a quarter of Netflix open interest is due to expire in the wake of Tuesday afternoon's first-quarter release, with bullish calls outweighing bearish puts.

Disney last week launched its Disney Plus service in the United States, which offers a range of Disney, Pixar and Star Wars films for $6.99 a month - much less than the $13 that Netflix charges Americans for its standard package. Analysts expected US$4.50 billion.

Netflix has historically posted very wide post-earnings price swings, averaging 13 percent since 2008.

It added 9.6 million total new subscribers during the period: 1.74 million new domestic subscribers in the US and 7.86 million in worldwide markets.