[$NFLX] Netflix’s Earning More Than Expected With Weak Local Subscriber Growth, Accounts Sharing Might Be Banned
After its release of the Q3 Financial Report in mid October, which discloses the company’s higher-than-estimates income, Netflix’s stock price has uproared to its recent peak on Oct 17. Unfortunately, the rise doesn’t last long. The stock falls back to 266.69USD within 5 days and is still fluctuating at around 280USD currently.
Netflix has recorded an income of $5.24 billion in 2019 Q3, with around an around 31% of year-over-year increase. The news is indeed encouraging for Netflix’s investors, though the subscribing number of the streaming service might not be as exciting.
Following its first-ever drop in local subscriber numbers in Q2 (see MAI for more), Netflix only records a growth of 500,000 paid net additions in the US this quarter, far less than the 800,000 estimation. Internationally, it has observed an increase in paid net adds of 6.3 million.
MAI’s data also shows that the retention rate of Netflix paying users has dropped slightly to under 80%, probably results from the price hike earlier this year. The slowing down of the growth of subscribers is particularly worrying as the streaming giant might face even more tense competition with upcoming launches of Disney +, Apple + and HBO Max.
Despite the potential challenges ahead, Netflix is planning to get their hands on a larger audience share by a more affordable plan. Since July, the streamer has launched a more affordable plan (around 2.8 USD per month) in India, which provides customers with access to Netflix’s programs in 480P on one screen. The $2.8 plan will be extended to more regions including Malaysia in the short term. Netflix’s strategy targeting a broader audience base might help in absorbing more international users when its local market is going weak.
Also, admitted by Chief Product Officer Greg Peters, Netflix is planning to regulate the account-sharing behaviors of its members. Rumours says that the streaming platform might only allow the sharing of accounts within one IP address in the future. Would this force its fans to register their own paying accounts, or would it further reduce its number of subscribers which is already experiencing a slow growth? MAI will continue to follow Netflix’s latest trend for you.
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Cara Lui is a blog-writer specializing in analytical industry trends and new discoveries of Mobile Apps with the assistance of the MAI Insights’ real-time online consumer data panel.