Netflix on target
Netflix (NFLX) is facing rising competition in the video streaming market. AT&T (T) is on track to launch its third video streaming service and it has its sight on taking market share from Netflix. Walt Disney (DIS) is not only withdrawing its movies from Netflix but also planning to launch a new video service to challenge Netflix in the video subscription market. Disney is purchasing the majority of 21st Century Fox’s (FOX) entertainment assets in what is viewed as part of its preparation to take on Netflix. Social media companies Facebook (FB) and Twitter (TWTR) are doubling down on video, all with an eye on taking subscribers from Netflix.
Selling cheaper service somewhere and raising prices elsewhere
Can Netflix survive the surging competition in its industry? In a recent interview with Bloomberg, Netflix CEO Reed Hastings alluded to a strategy that could see Netflix accelerate subscriber acquisition in developing countries and at the same time generate more cash to invest in premium content that can set it apart from the competition.
In one case, the executive talked about Netflix introducing a new service version that costs less than the company’s existing plans. A cheaper service could help Netflix grow its foothold quickly in developing countries with significantly lower per-capita income. While selling cheaper video subscriptions elsewhere, Netflix may also raise prices in some markets to help it generate more cash to finance its original productions.
Over 130 million paying subscribers
Original programming has been a key advantage for Netflix in the race for video streaming subscribers. The company exited the third quarter with 130.4 million paying subscribers globally.