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Netflix Says That Markets with Competing Services Like Hulu Not Affecting Growth

Jason Gurwin

In anticipation of the launch of Disney+, Apple TV+, HBO Max, and Peacock — Netflix is trying to relieve some investor fears that they may be under attack. In the Q3 letter to investors, Netflix says “The launch of these new services will be noisy. There may be some modest headwind to our near-term growth,” which the company says has factored into the slower annual growth for next quarter.

In the long-term though, Netflix expects that the “strength of (their) service” combined with a “large market opportunity” will allow them to continue to grow. The company gives the example of Hulu, which in the U.S., has 28 million subscribers. The company sees that their market penetration in the U.S., where Hulu exists, is about the same as in Canada where it doesn’t.

“We believe this is due to the big factor of streaming growing into linear TV plus the fact that streaming video services have mostly exclusive content libraries that make them highly differentiated from one another.” Ultimately, Netflix feels there is more of an opportunity converting linear TV viewers to streamers, than there will be stealing share from one another.

This isn’t the case though in all markets though, like India, where Netflix has had to introduce a cheaper mobile-only plan to compete with Hotstar and Amazon Prime Video.

The company has invested nearly $15 billion in original content, which will be on full display in the fourth quarter, with the debut of many of their big-budget films. Martin Scorsese’s ​The Irishman​ (with Robert De Niro, Al Pacino, and Joe Pesci), ​Marriage Story​ (starring Scarlett Johansson and Adam Driver) and ​The Two Popes​ (featuring Anthony Hopkins and Jonathan Pryce), all of which have emerged as early Oscar frontrunners.

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