Netflix Needs Lower Prices To Woo Indian Customers, Say Analysts

Ivan Schwartz
October 20, 2018

Despite the cut, Netflix shares rose 1.2 percent in premarket trading to $338.69.

Netflix shares soared on Tuesday as the streaming service announced higher growth than expected numbers of new subscribers.

Netflix's results sent shares of Alphabet Inc, Facebook Inc and Amazon.com Inc up about 1 per cent higher in extended trade. The company believes that global markets will one day account for 80 percent to 90 percent of its customer base (like fellow internet giants Facebook and Google).

The streaming behemoth said Tuesday that its subscriber base grew by almost 7 million in the quarter, led by the addition of 5.9 million new users overseas. This appears to be part of the general optimizing growth strategy to exploit the tailwinds in the current market.

The company said it expects to add 9.4 million net subscribers globally in its fourth and final quarter of the fiscal year.

Netflix is now the most expensive video streaming service in India, with monthly subscription plans starting at Rs 500, more than double of its rivals in India.

Netflix earned 403 million dollars on revenue of four billion dollars in the quarter.

Netflix distributes dramas, movies and other video content over the Internet at a fixed subscription price.

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Expansion into new program genres like self-produced romantic comedies and unscripted TV, as well as growth in new geographies like India and broader Asia, suggests 2019 could be even better, the analysts added, reiterating their outperform recommendation.

"Netflix's strong quarter will at least temporarily put to rest questions over the long-term viability of its business and shift focus to the competition, which continues to significantly lag the streaming giant". It added 6.96 million new subscribers, exceeding expectations and coming in particular relief after the company disappointed during its previous quarter. Over the last quarter, insiders sold 420,428 shares of company stock worth $149,570,353.

Hasting said they also plan to expand Netflix's original programming to other Indian languages and also explore more bundling partnerships in India.

Analysts estimate that it added about 676 hours of original programming in the U.S. in the most recent quarter, 135% more than in the same period a year earlier. Revenue increased 25% to $4 billion.

Worldwide territories remain the key to the company's future, and accounted for 84 percent of Netflix's new customers in the third quarter.

The analyst doesn't have an official price target for Netflix, but pegs the company's fair value at $377 a share.

Subscriber additions: 7 million total.

Netflix chief content officer Ted Sarandos said in the earnings interview that Sacred Games and Ghoul along with the original movie Love Per Square Foot, has helped grow the awareness of the service that made its India debut in January 2016.

Other reports by GizPress

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