Financial dividend exhausted, Nafi in danger



After a year of explosive growth, Netflix, the streaming media service provider, has suffered Waterloo. Although revenue is still growing, user growth has stalled. When the economic dividend brought by the epidemic recedes, when the user’s demand for content is further upgraded, and the streaming media market is surrounded by wolves, if Netflix does not find a way to precipitate loyal users, it will be hard for Netflix to go ahead.


宅经济红利耗尽 奈飞危险了

Up and down

On April 20 local time, Nafi released its first quarter financial report for fiscal year 2021. According to the financial data, Nafi’s performance is still growing.

Specifically, Netflix’s revenue in the first quarter was $7.163 billion, up 24.2% year on year, exceeding analysts’ expectations. According to a survey by FactSet, a financial information provider, analysts had expected Netflix’s first quarter revenue to reach $7.14 billion on average. In addition, net profit was US $1.707 billion, up 140.8% year on year; earnings per share was US $3.75, up 58% year on year.

However, despite the good results, the share price of Nafi fell by more than 11% after the first quarter report, which may be attributed to the user growth in the first quarter far less than expected. According to the financial report, Netflix only added 3.98 million subscribers in the first quarter, lower than the 6.29 million predicted by Wall Street and its own 6 million, not to mention the 15.77 million in the same period last year.

This also marks the weakest start of Nafi since 2013. “We have achieved steady growth in the past few years,” said reed Hastings, Nafi’s executive chairman and co CEO, in a live webcast to investors. “It’s a bit volatile now.”

The challenge is more than that. In the current quarter, Netflix is expected to get 1 million new users, which is far lower than analysts’ forecast of 4.44 million. However, this situation is not unexpected. Nafi has been warning for several months that its growth will slow down after the epidemic, but did not expect such a sharp stagnation.

In addition to the number of users concerned, the demand for user content is also declining. In its latest ranking, market research firm parrot analytics revealed that the total demand for Netflix content, which measures the popularity of the platform’s content, was slightly higher than 50% in the first three months of this year, down from 54% last year and 65% the year before last.

For the performance and user situation, as well as the next plan, Beijing Business Daily reporter contacted Naifei company, but as of press, no reply has been received.

Housing economic dividend

Nai Fei attributed the slowdown in user growth to the “COVID-19 push” effect, that is, because of the epidemic, everyone stayed at home and needed to see what things were, so it accelerated its growth in 2020. Now, that double-edged sword is hurting performance in 2021.

In addition, Naifei said that the lack of new plays is also a reason. Although there are some popular dramas such as Bridgerton Cobra Kai, after the middle of January this year, the number of new dramas has decreased and lost its growth power.

Yang world, an Internet analyst, told Beijing Business Daily that the slow growth of Netflix’s users this time should be mainly due to the withdrawal of user dividends brought by the epidemic, and the user cycle has passed a high growth period. Because this kind of growth is short-term and cannot be normalized in the long run.

More analysts predict that people will spend less time on streaming media because of the expansion of new crown vaccination and more people going out to work.

However, Netflix can also be described as “no high song, no worry”. When the number of users surged before, Netflix once said, “we think that under the background of long-term adoption of internet entertainment, the quarterly fluctuation of net growth of paying users is not significant. As we continue to improve our services, this will provide us with strong growth for many years to come. “.

It is worth noting that Nafi denied the reasons for the competition. They point out that the growth of this market has slowed down all over the world, not just in the crowded US streaming market. Disney +, HBO Max and peacock are unable to compete with Netflix in many parts of the world.

Netflix’s confidence is not without confidence. The billions of dollars they invested in content are still reaping rewards. According to a new survey by Morgan Stanley, most American consumers say that Netflix has the best original programs and is also the most frequently quoted original programs. According to the 2021 streaming media survey of Wall Street analysis company, 38% of the respondents rated it as the best original program platform.

The wolves were all around

Although its dominant position is still unshakable from the data point of view, the hidden worries have emerged: on the one hand, new competitors such as Disney +, HBO max, parameter +, Apple TV + have risen one after another; on the other hand, old competitors such as Amazon Prime video and Hulu have been attacking cities and pulling out strongholds, resulting in the gradual erosion of Nafi’s share.

At the same time, Nafi also admitted that with the reorganization of major Hollywood studios such as Disney and Warner media, the competition for video subscribers has become increasingly fierce.

In early March, Disney’s streaming media platform, Disney +, announced that the number of global subscribers had exceeded 100 million. At the end of last year, the number was 94 million, which means that in more than two months, the number of subscribers of Disney + has increased to 6 million, far exceeding the 3.98 million of Netflix in the first quarter of this year, which is only more than one year since Disney + was launched.

On the other hand, Nafi’s content production also encountered obstacles. The epidemic has delayed the release of many of Nafi’s major plays to the second half of this year, with most of the films and TV series that should have been shot last year either delayed or cancelled. “There’s nothing to see this quarter,” says Michael Nathanson, an analyst at Moffett Nathanson LLC.

Yang world also believes that the content production cycle of Netflix itself is relatively long, and it is difficult to retain the current users without further stimulation.

Yang world further analyzed that Disney +, apple, etc. are currently working on content. On the other hand, platforms like apple have high user loyalty and their user structure has its own characteristics. It is no doubt a big challenge for Naifei. After a period of high growth, Netflix should consider the high-quality precipitation of users and how to leave loyal users with consumption ability and frequency.

In terms of content production, Netflix said it would continue to “burn money” on a large scale. The company announced its plan for 2021: it is expected to release at least 70 original films, and has great hope for new plays and films. Naifei also revealed that at present, more than 500 works are in post production or ready to go online, and it is estimated that $17 billion will be invested in content this year. The growth will pick up in the second half of this year, and the payment trend in all regions of the world will increase.

It is not that Nafi does not have its own advantages in the market where many parties are making efforts. Yang pointed out that Nafi’s low price strategy may still work. In terms of subscription revenue, youtube and Disney charge subscription fees in various ways. They have distributors operating virtual multi-channel video programs, which is much more expensive than on-demand streaming media such as Nafi.

Beijing Business Daily reporter Tao Feng Zhao Tianshu

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