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Can Netflix Withstand Competition from Streaming Rivals?

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Global OTT content market

Netflix (NFLX) is the world’s largest online video streaming company and had a total global paying subscriber base of nearly 139.3 million at the end of the fourth quarter. However, the growing popularity of over-the-top (or OTT) offerings has attracted a lot of consumers to streaming services.

The global OTT content market has been developing rapidly and is expected to touch $245.8 billion by the end of 2028, according to a report by Future Market Insights.

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Netflix’s competition in the streaming space

Netflix is facing stiff competition from both established as well as new players. Like Netflix, Amazon’s (AMZN) Prime Video, Hulu, and AT&T’s (T) HBO Now are popular streaming service providers. To step up the competition, Walt Disney (DIS) and AT&T’s WarnerMedia are also launching their streaming services in late 2019. Disney, which currently has a 30% stake in streaming service Hulu, would get another 30% stake in Hulu after the completion of the acquisition of the media assets of 21st Century Fox, which might further dent Netflix. Comcast’s (CMCSA) NBCUniversal also plans to debut its streaming service in early 2020.

Apart from streaming service providers, Netflix is also facing a threat from popular online videogame “Fortnite” and Alphabet’s YouTube, which are taking up substantial portions of consumers’ screen time. Netflix believes that Fortnite might pose a challenge to all services used on a TV.

Netflix remains the content king

Despite fierce competition, Netflix remains the king of original content. During the fourth quarter management call, Netflix’s CEO said that people in the US spent about 1 billion hours in front of the TV per day. 10% of this total was on Netflix.

Netflix reportedly released around 781 hours of original programming in the US in the fourth quarter, according to Cowen & Co. The 781 hours released were also higher than the 676 hours spent in the preceding quarter.

Also, per Statista, Netflix is projected to have 65 million subscribers in the US by 2020. HBO Now, AT&T’s DIRECTV Now, Dish Network’s Sling TV, and PS Vue are anticipated to have 5.6 million, 5.5 million, 3 million, and 0.5 million US subscribers in 2020, respectively.

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