Is Netflix losing popularity amid looming threats from Apple, Disney?

The on-going streaming war between Netflix and its competitors is now gaining steam, and it is clearly not in favour of the Reed Hastings-led streaming giant. Subscriber growth for Netflix continues to plummet ahead of the high-voltage competition from Apple and Walt Disney.

Netflix has released its quarterly results and the numbers show a significant drop in subscriber growth, particularly in the US, further indicating golden days for the company may be numbered. Between July 2019 to September 2019, Netflix added 6.8 million subscribers worldwide, as opposed to 7 million that Netflix anticipated.

In the US, only 520,000 were added as opposed to 800,000 that Netflix anticipated. During the previous quarter, Netflix lost 123,000 subscribers in the US, marking its first decrease in eight years.

The latest miss on U.S. subscriber growth “spells trouble for the company ahead of heightened competition,” said eMarketer analyst Eric Haggstrom. “The fourth quarter represents a completely new ballgame for Netflix.”

What could be the issue?

Uncertainty about Netflix’s future growth could be the reason why Netflix's stock had dropped by about 30% below its peak price of $423.21 reached 16 months ago. Netflix expects to add another 7.6 million worldwide subscribers during the final three months of the year as opposed to 8.8 million during the same period last year.

“The launch of these new services will be noisy,” Netflix advised in its third-quarter letter to shareholders. “There may be some modest headwind to our near-term growth, and we have tried to factor that into our guidance.”

Netflix heads into a showdown with slowing subscriber growth

Competition

It remains to be seen whether some of Netflix's existing subscribers ditch the service in favour of cheaper alternatives that Apple and Disney. Both the companies will launch their streaming service within the next month. Netflix’s most popular plan in the US costs $13 per month. While Apple is charging only $5 per month for its service, Disney is selling a service for just $7 per month.

Netflix CEO Reed Hastings acknowledged this week that a US price increase imposed earlier this year is causing some current subscribers to cancel the service and perhaps causing some prospective subscribers to shy away.

Apple TV+ launches full-blown price war, Netflix stock fell 2 per cent

“There’s a little more sensitivity, we are starting to see a little touch of that,” Hastings said during a discussion about the third quarter. “What we have to do is just really focus on the service quality, make us must-have.”

(With AP inputs)