Concern about Netflix ‘overstated’

Concern over the recent dip in Netflix’s share price that followed mixed financial results is “overstated”, as the streaming service “continues to go from strength to strength”, according to an analyst.

Netflix added 880,000 US subscribers in the third quarter of 2015, missing a 1.15 million forecast and falling 110,000 on the previous year.

This led to a significant share price dip (shares are US$97.32 at press time), but Ovum analyst Tony Gunnarsson wrote that the subs results were “respectable” and that “the negative news is overstated”.

“It remains the clear domestic SVOD market leader – with a 65% market share in 2015 according to our analysis – and by far the dominant player internationally, driving SVOD markets everywhere,” according to Gunnarsson, who is senior analyst of TV practice at Ovum, which is owned by DTVE publisher Informa.

“This year, the SVOD pioneer is on track to add more than five million new subscribers in the US for the fourth consecutive year. Hardly a disappointing run.”

Ovum predicts will have a total of 71.3 million global subs by end-2015, short of Netflix’s own forecast of 74.3 million, which the analyst firm believes is “a little on the optimistic side”.

Internationally, Ovum has previously predicted Netflix to have a subs base of 26.6 million at year-end, which is significantly down on the 29.4 million Netflix expects to have garnered.

Ovum believes that launch in new markets such as Spain, Italy and Portugal will not benefit Netflix at the year-end of 2015, but in first quarter of 2016. This in line with what happened when Netflix launched in France and Germany in 2014.

One challenge for Netflix is the increasing saturation of the SVoD market, especially in the US. Yesterday, Google-owned video site YouTube revealed its paid-for product, YouTube Red, which will offer original programming ad-free for a US$9.99 monthly subscription.

Netflix yesterday completed its trio of southern European launches by debuting in Italy, following Tuesday’s launch in Spain and Wednesday’s debut in Portugal.

The SVoD provider is available in Italy on the usual range of devices, and has signed up with Telecom Italia to make the service available on the latter’s TIMvision set-top box.

Italian content available on the service at launch includes Amiche da Morire, Generazione 1000 Euro, and Reality.

Netflix is available on Vodafone’s platform in Spain and Portugal, as well as on a wide range of other devices. Spanish content at launch includes Allí Abajo, El Ministerio del Tiempo, and feature Tres Metros Sobre el Cielo.