Question

Netflix Subscriber Growth Falls Short in U.S., but Leaps Abroad

By Joe Flint Micah Maidenberg | January 21, 2020

Netflix Subscriber Growth Falls Short in U.S., but Leaps Abroad - WSJ-1.pdf
https://www.wsj.com/articles/netflix-misses-its-subscriber-forecast-11579641293

Topics: Earnings Per Share , Revenues
Summary: “Netflix Inc. missed its forecast for U.S. subscriber growth for the third straight quarter, but blew through its expectations for overseas expansion…” These results constitute a mixed performance that Netflix attributes to new competition from the likes of Apple, Walt Disney Co. and others. But Netflix has a “big headstart in streaming” and argues that the growing competition “will harm traditional television, not its own business.” However, the company now faces questions about the sustainability of its growth. This performance and the financial statement amounts discussed in the article have been announced in a Letter to Shareholders and furnished to the Securities and Exchange Commission (SEC) on Form 8-K on January 21, 2020. It is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1065280/000106528020000035/nflx-20200121.htm

Questions:

What does Netflix do?

What competition is affecting Netflix’s financial performance?

Answer 1

Netflix is a streaming service that offers its viewers a wide variety of classic TV shows, along with movies and documentaries, on more than thousands of internet - connected devices. Every month more TV shows are added, and there is always something new to discover. Unlimited viewing can be enjoyed without getting commercials.

Key points which is affecting Netflix's financial performance :

1) Increased competition from the launch of new streaming services could harm its subscriber growth.

2) Increases in price have hurt growth in the U.S.