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Netflix disappoints investors with slower growth

July 17, 2018 06.43 Europe/London By Robert Briel

Netflix added 5.2 million users worldwide in the second quarter, or over 1 million fewer than the streaming service had expected.

Investors punished Netflix hard and the company’s valuation went down sharply on Wall Street. With a drop of more than 14%, the video giant lost some $24.2 billion in market capitalisation.

Netflix writes in a letter to shareholders that it has overestimated growth. For this quarter, the group has revised its growth forecasts downwards to 5 million new users.

Turnover was $3.9 billion, profits rose to $384 million, compared with $66 million a year ago. Netflix had some 130 million paying users worldwide at the end of the quarter.

Netflix said it will be investing more in its own non-English-language productions in the near future. This is necessary because the company observes that HBO and Disney (as well as Amazon and Apple) are catching up. This year, the company investing about $7.5 to $8 billion in content.

“In addition to succeeding commercially, we are starting to lead artistically in some categories, with our creators earning enough Emmy nominations this year to collectively break? HBO’s amazing 17-year run?,” wrote Reed Hastings in his letter to investors.

The company expects growth to level off in the coming years, partly due to the emergence of large competitors in countries such as Germany and France.

Hastings: “We anticipate more competition from the combined AT&T/Warner Media, from the combined Fox/Disney or Fox/Comcast as well as from international players like Germany’s ProSieben and Salto in France. Our strategy is to simply keep improving, as we’ve been doing every year in the past.”

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Filed Under: Editor's Choice, Finance, Newsline, On Demand/VOD, Top Story, TV Tagged With: Netflix Edited: 18 July 2018 10:54

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About Robert Briel

Arnhem-based Robert covers the Benelux, France, Germany, Austria and Switzerland as well as IPTV, web TV, connected TV and OTT. Email Robert at rbriel@broadbandtvnews.com.

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