Netflix growth is so chill

19/04/2016 Sandi

In a report shared by Telecompaper, Netflix had reported high numbers of their service use during the first quarter (Q1) of 2016, but those have now slumped in the second quarter (Q2).

“The company added 2.30 million new streaming customers in the US and 4.51 million at its international activities, beating its own guidance of respectively 1.75 million and 4.35 million. The total number of streaming subscribers reached 47.0 million in the US and 34.5 million elsewhere.”

Firstly, Netflix had grown its subscriber base this year when it launched Netflix everywhere, reaching 190 countries globally, Zambia inclusive (there was speculation that it would rival long-serving TV service provider Multichoice but Multichoice Zambia responded and said Netflix was welcome here). ISP provider Hai even jumped on the bandwagon and offered a peering agreement that would mean all content streamed on Netflix would come directly from the South African servers, with “no middlemen or bottlenecks”.

So why is growth slowing down?

It increased its subscription prices from $7.99 to $9.99 per month, forcing it to lower its forecast for the number of new or returning users it will get in the 2016 Q2.

In many markets, it is facing stiff competition with other TV streaming services such as Amazon and Hulu, who are charging less than Netflix per month, $8.99 and $7.99 respectively.

In many emerging markets, data streaming rates are still very high for some users, who may stick to traditional TV broadcasting, and free-to-air or paid-for set top boxes.

Netflix is, however, working on a plan to still grow by adding new content and has raised its content budget from $5 billion to $6 billion in 2017, according to WSJ. they will also work on adding more content available for viewing in all the regions they operate in. Netflix CEO Reed Hastings said this to Wired in a video call: