Business

With more competition, Netflix stock prices drop

Unexpected decrease in the US paid-subscribers base affected the company's shares

If Netflix was once considered the only one of its kind, this may soon come to an end. As competition in the streaming service market tightens with the arrival of new players such as HBO Max, Amazon Prime Video and Disney+ joining the club, several market signs are surely pushing the California-based firm out of its comfort zone.

Contrary to Wall Street predictions, whose estimations were at 309,240 new Netflix paid-subscribers in US only, the company’s base shrunk in the country by 130,000 in the period of Apr-Jun, due to a price-hike. As a result, the stock prices of the Stranger Things company fell by 11%. This is the company’s first slump in US subscribers since 2011.

As for the results worldwide, Netflix also showed a slowdown, with new subscriptions reaching merely 2.7 million new members in the 2nd quarter, way below their previous forecast of 5 million new additions. To keep winning emergent markets, where users are usually more price-sensitive, the streaming service is launching a new cheaper product in India, focused on mobile-only, as reported by Bloomberg.

With more players in the market, and some of them taking back the rights of popular productions Netflix had in their catalogue, such as The Office and Friends; the company will face the challenge of relying more on its own shows and balance its budget, since investors are concerned about the company’s heavy spending and low profitability.

Although the last quarter drop seemed unsettling, the company is confident that it can reach its best performance regarding customer growth in 2019, with new releases such as a Martin Scorsese movie and new seasons of The Crown and Orange Is The New Black coming – all of this right after the 3rd season of big hit Stranger Things. But competition is surely growing stronger and the next chapters of this saga remain to be seen.