Netflix numbers on the global market are looking up but industry analysts believe that growth will be slowing for the company in 2020. That's according to industry analyst Paolo Pescatore of PP Foresight and others in the market cited in recent reports. Not only is the company facing growing competition. Netflix's heavy spending could also be a sticking point for the company in the future.
According to Paolo Pescatore, while Netflix is hitting some of its expectations, it is also falling short. Notably, the company missed its figures for the second and third quarter of 2019. The media streaming giant has a huge headstart in the industry but is bleeding money, the analyst indicates.
That mostly comes down to spending that the company is going to have a hard time recouping. It will either need to add customers or raise prices. That's something consumers should prepare for in any case, the analyst continues, because the third option is to take on more debt. If Netflix does that, it's going to need to raise prices anyway to pay that back.
Netflix by the numbers isn't looking too bad but growth is expected to slow
Looking purely at the numbers, Netflix is actually not looking too poorly. In the three months leading to December 31 of last year, it managed to add 8.76 million paid global subscribers. It also finished off the year with more than 167 million paying customers around the globe.
The latter figure there is actually ahead of expectations for the year. It's net income and total revenue both grew too. Respectively, income was up to $587 million from $134 million the prior year. Year-over-year growth in revenue took the company from $4.2 billion to $5.5 billion.
But for the next year, Netflix is only expecting to add 7 million subscribers worldwide in the first quarter. That's down 1.76 million over the previous quarter. Its US business, amid a growing competitive field, also fell 420,000 subscribers below expectations.
It's similar drops in the US, shortcomings, and growth in competition worldwide that industry analysts point to as a reason to be concerned about growth slowing for Netflix in 2020.
Competition in the future will continue heating up
Mr. Pescatore is backed in his second line of reasoning by MediaCom UK COO Luke Bozeat. Both Mr. Pescatore and Mr. Bozeat indicate that Netflix leads the pack thus far by setting a high bar to be cleared by emerging competitors. Moreover, it has set a cord-cutting industry standard that does give it an edge.
However, it is no longer only established players like Amazon Prime, Sky's NOW TV, and others that the company needs to compete with. In the US, where Netflix's figures fell, that decline coincided with the launch of Disney+. That competitor will continue launching in further markets going forward and there are other competitors emerging as well. That includes services such as BritBox, Apple TV+, and Peacock.
For now, Netflix has some leeway to fight slowing growth in 2020 via "its overseas operations."
Namely, that's the EMEA region but with competition growing steadily in those regions in the future, there's no guarantee that will be enough. As competitive practices pick up and customers are given more options for streaming apps and services, the trend for Netflix seems likely to continue.