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article imageNetflix loses 130,000 US subscribers in the 2nd quarter of 2019

By Ken Hanly     Jul 18, 2019 in Entertainment
Los Gatos - Netflix lost customers in the US in the second quarter of 2019, and did not add as many subscribers globally as the company had projected. This is the first time it has lost subscribers in the US since 2011 when the streaming platform became separate.
Netflix CEO Hastings positive about outcome of streaming wars
Hastings took the loss of 130,000 US subscribers in stride as well as the fact that although the company added 2.7 million subscribers globally this was just half of what company executives had projected. The earning report also concerned investors who are now concerned that Netflix may not be able to deal effectively with upcoming competition from direct-to-consumer TV products such as will be offered by Disney, Warner Media, Apple and NBC Universal.
However Hastings sees the competition as a net positive overall for the industry saying: “It’s never been a better time for talent. They get to bid themselves off between us, Disney, Amazon, etc. But it’s not a zero-sum competition. I think everybody gets that. People will subscribe to multiple shows. It’s a great competition that helps build the industry, and the advantage of having something catchy like the ‘streaming wars’ is it draws more attention. And because of that, consumers shift more quickly from the linear TV to the streaming TV.”
Competition for original programming driving up prices
As licenced content becomes more scarce and costly, original content is in great demand also rising in cost quickly. As companies try to lock in large-scale deals for original content. Creators such as Ryan Murphy, Shonda Rhimes, and J.J. Abrams have signed deals in the nine figure range with streaming companies. There is also price raising competition for licensed content such as Friends and The Office. Both are leaving Netflix for WarnerMedia and NBC Universal' respective streaming platforms. The shows cost the two companies more than $400 million to have for several years.
Netflix proactive in response to what it saw coming
Years ago Netflix anticipated what was coming and how consumer tastes would develop. Ted Sarandos, Netflix's chief content officer said: “Over six years ago we got into original programming, betting that the licensed program would be more difficult to come by, and that maybe the sources of content to license from would be under different levels of strain. That has paid off. It’s been very important to the business to continue pushing down that road. More international, more global, more original film. We think we’re betting in all the areas of content that consumers love.”
Hastings sees YouTube as its big competitor
As the US market becomes saturated and Netflix concentrates on global expansion, it is You Tube that Hastings sees as the largest competitor of Netflix. Hastings says: “We do wonder in the fullness of time, ‘Can we be as big as YouTube? YouTube is seven times larger than us, roughly, in viewing hours, and a phenomenal service. Of course, it’s free. So the real question is, can we produce enough content that people are willing to pay for?”
Disney could also be a big threat, as it already owns Hulu. But it will take years to come close to the Netflix subscriber numbers. WarnerMedia and NBC Universal still have not said much about international growth.
Meanwhile, as Sarandos noted, Netflix series from Germany, Denmark and Sweden have 12 to 15 million global watchers. While investors may be a bit nervous about Netflix, Hastings claims the company is in an excellent spot saying: “In the beginning, there was Hulu, Amazon, YouTube, and Netflix, and we’ve all been growing at tremendous rates over the last 12 years. And we’re having a lot of new competitors enter over the next year. I think our position is excellent. If investors believe in internet television, then our position in that market is very strong.”
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