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Published: Wed, April 19, 2017
Economy | By Melissa Porter

As subscriber growth slumps, Netflix offers cinema chains a truce

As subscriber growth slumps, Netflix offers cinema chains a truce

Netflix (NFLX) is on the verge of surpassing 100 million global subscribers, a testament to how much the video streaming service has changed the entertainment landscape since its debut a decade ago.

However, if theatres wanted to pick up a Netflix original such as the upcoming Will Smith film Bright, they would only be able to show it at the same time as Netflix. Netflix, based in Los Gatos, California, has lined up a slew of high-profile releases in the coming months, including new seasons of "House of Cards", "Orange Is the New Black" and "Master of None".

If you feel like everybody's talking about the latest thing they watched on Netflix, maybe they are.

Netflix is guiding for a lower second quarter, with 3.20 million net streaming adds, including 0.60 million in the USA and 2.60 million internationally.

Considering that Netflix ended its first quarter with 98.5 million total subscribers, Jefferies analyst John Janedis said the fact that the company already expects to crack 100 million this weekend means it has already significantly chipped away at its second-quarter growth guidance.

Netflix's biggest success, "13 Reasons Why", debuted the last day of the first quarter.

Netflix CEO Reed Hastings anticipates the next 100 million subscribers to expand more swiftly than the first 100 million, but he didn't give a particuar schedule during an online video review of the organization's first quarter. Mostly to make its movies eligible for Oscar nominations, Netflix has had to partner with luxury theaters like iPic on limited theatrical releases instead. Revenue will be $2.75 billion, versus Wall Street projections of $2.76 billion. Consolidated revenues rose to $2.6 billion, delivering a net profit of $178 million. The net profit is estimated at United States dollars 66 million, with the operating margin at 4.4 percent.

Netflix came up short of its subscriber forecasts for this quarter, but the SVOD says the slower growth early in 2017 isn't cause for concern.

"We have high satisfaction and are rapidly growing in Latin America, Europe and North America", the company said in its letter to shareholders.

It said it plans to spend $1 billion on marketing, on top of a $6 billion programming budget, to promote its titles in 2017.

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