While Netflix CEO Reed Hastings says that his company is in good shape, Wall Street has its doubts. That concern resulted in Netflix shares dropping 16 percent to $85.45 directly after its first quarter numbers were announced.
Netflix added 1.7 million new streaming subscribers in the first quarter — considered only light growth for the second straight quarter.
Growth for Q2 is predicted to be lower. “During the analyst call, Hastings appealed for calm and said the problem was temporary and seasonal. The second quarter is typically tough on Netflix,” reports CNET. “Skeptics, however, worry that the problems could be more lasting and have more to do with the company’s inability to secure film licenses and growing competition in the streaming-video sector.”
In order for Netflix to remain competitive and elite, it has to secure more content to encourage subscriber growth. “But licensing costs have gone through the roof,” CNET notes, and “Netflix failed to renew a licensing agreement with Starz, the pay-TV cable service that supplied Netflix with films from Disney and Sony Pictures.”
In the meantime, the competition is growing stronger as Hulu, Amazon and HBO Go continue to expand, along with Comcast’s new Xfinity Streampix service.
No Comments Yet
You can be the first to comment!
Leave a comment
You must be logged in to post a comment.