Did Netflix Just Sneakily Admit 'Added Competition' Is Hurting Its Growth?

Netflix Inc NFLX acknowledged that heightened competition may be having an impact on its growth but the admission can hardly be described as forthright. 

A Sly Admission? In its fourth-quarter letter to shareholders, the streaming video on demand company wrote, "consumers have always had many choices when it comes to their entertainment time - competition that has only intensified over the last 24 months as entertainment companies all around the world develop their own streaming offering.

“While this added competition may be affecting our marginal growth some, we continue to grow in every country and region in which these new streaming alternatives have launched.”

Netflix appeared to have admitted that the SVOD segment now has plenty of players like Walt Disney Co’s DIS Disney+, AT&T Inc’s T HBO Max, Comcast Corporation CMCSA owned Peacock, and Viacom CBS’s VIAC Paramount+.

The Heat Is Global: “Even in a world of uncertainty and increasing competition, we’re optimistic about our long-term growth prospects as streaming supplants linear entertainment around the world,” the company said in its shareholder’s letter.

But this competition around the world is only likely to intensify in the coming future. On Wednesday, Disney CEO Bob Chapek announced the creation of an International Content Group that will function under the newly appointed Rebecca Campbell. 

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Chapek touched on Campbell’s appointment and said she would bring her “expertise and talent to oversee the growing pipeline of original local and regional content for our streaming services while continuing to lead our international operations.”

Even streaming laggard Apple Inc AAPL is turning up the heat in local Korean content after Netflix found immense success with “Squid Game.”

Netflix Soldiers On Regardless: The SVOD platform operator appeared to take the view there is plenty of sea for multiple fishes in its shareholder’s letter.

It reinforced that point by pointing out that streaming still accounts for under 10% of TV screen time in the United States, its biggest market.

“The greatest opportunity in entertainment is the transition from linear to streaming and that with under 10% of total TV screen time in the US, our biggest market, Netflix has tremendous room for growth if we can continue to improve our service,” the company said.

It is in its biggest market coupled with Canada that the company raised subscription prices by $1 to $2 per month this week. A Netflix basic plan that costs $8.99 now costs $9.99 per month. 

Notably, the price increases came even as competition intensifies, which could be construed as a mark of confidence as far as customer retention goes.

Netflix Q4 Numbers And Beyond: Netflix reported Q4 revenues of $7.71 billion which came in below estimates. It reported earnings per share of $1.33 in the period beating estimates of 82 cents per share.

First-quarter guidance of $2.86 per share is below the estimate of $3.45 per share. The company gave revenue guidance of $7.903 billion compared to an estimate of $8.08 billion for the period.

Price Action: On Thursday, Netflix shares plunged 20.22% in the after-hours trading to $405.50. The shares closed the regular session down 1.5% at $508.25.

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