If Netflix had to script the perfect business scenario, it may well involve a world where people are trapped indoors for months on end.
So, by that metric, 2020 was pretty much on the money, and lockdowns across the world have been pretty good for the company’s bottom line.
Over the course of the year, Netflix’s stock price has risen almost 70%, and the first two quarters have shown massive subscriber growth in various regions.
This week will see the release of the third-quarter numbers, and whilst they’re expected to show growth, they may be a sign of things to come.
CNN reporting below:
Netflix’s subscriber forecast of 2.5 million in the third quarter is a “conservative number” that the company should exceed, [senior analyst Bernie] McTernan believes. However, it could be an indicator that next year may be much leaner than 2020.
“We think that in 2021, subscriber growth is going to be slowing substantially,” he told CNN Business. “We think that the outlook for ’21 will be more challenging for Netflix.”
McTernan, who is more bearish on Netflix than most other investors, added that he’s curious about whether the company will raise prices next year — a move that could lead customers to cancel the service.
There’s also the added pressure of increased competition, with a number of new streaming options entering the market, or gaining in prominence, throughout 2020.
At least they can scratch Quibi off the list.
It’s expected that Disney’s streaming service, Disney+, may lead the charge against Netflix:
Disney+, the company’s nascent streaming service, has brought in more than 60 million subscribers in less than a year. That put the service’s growth way ahead of schedule since the company told investors last year that it projected Disney+ would have 60 million to 90 million global subscribers by 2024…
“The reorganization is really interesting, and it speaks to the company’s focus on streaming,” McTernan said. “Netflix just hasn’t faced this kind of global competition before. The easy days of no competition are over for it.”
From a consumer perspective, the more competition the merrier, really.
Even with giants like Disney entering the market, along with HBO Max, Apple TV+, Amazon Prime Video, and a number of others, Netflix’s early start out of the gates means it’s still the first name that comes to mind when people think of streaming.
Whilst the company’s stock price may not rise at such a rapid rate in the months and years to come, it remains the service with the biggest target on its back, which is generally a good place to be.
Just a few notes of that ‘ta-dum’ intro sound and everybody knows what’s cooking.
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