Netflix: “Traditional TV should be scared”

The impressive subscriber numbers from Netflix should worry traditional broadcasters, says one analyst. Adding around 7 million net subscribers (5.1 million international) during its Q4 suggests that sometime this Spring, Netflix will pass the 100 million subscriber mark. Currently the subscriber base is 93.8 million.

US ARPU grew a massive 14.9 per cent, while International grew 10.3 per cent, both Netflix’s highest-ever annual improvement. And it is worth remembering that its International activities are in many markets embryonic.

All these key metrics were ahead of market expectations.  Indeed, in after-hours trading on January 18th buyers sent the Netflix share price rocketing 8.2 per cent to $144.16 per share.

This week Netflix confirmed its 2017 programming spend would exceed $6 billion, and be reflected in more than 1000 hours of premium original programming. Around 42 original series would launch during Q2.

The number-crunching equity analysts were ecstatic. For example, Exane/BNP-Paribas said: “We believe most broadcasters in Europe are less exposed to the Netflix risk due to its later arrival and the importance of original content…. Yet they tend to 1) underestimate the pace of Netflix (and Amazon etc) investment in local and global content as well as the 2) superiority of the product in terms of ease of use, speed, recommendation and 3) the economies of scale they are able to generate. Netflix has entered in our view a positive spiral of growth and investment, and the investments by Amazon or other US content houses will only accelerate the transition away from linear mass market TV and the risk of long term price deflation in pay TV.”

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