Netflix: Subscription losses could lead to M&A plans

Everyone loves watching Netflix, the most famous streaming service in the world. Revenues increased almost a fifth in the last quarter compared to the previous year and net income almost doubled. However darkness settled on the company’s financial prospects. Rivals Disney and Amazon are building impressive libraries of television and film content. Netflix should consider buying its own studio.

Subscription growth this year may never correspond to the 2020 release. Netflix added 1.5m new net subscribers in the second quarter. While it was above its own low forecast, it failed to attract anything like the 10m in the same quarter last year. Pessimists complain about the loss of nearly half a million subscribers in North America and Canada – the first drop in two years.

Netflix needs a growing supply of customers in the richest countries in the world who can absorb prices and increase profits. Over the past two years, average revenues per member in the United States and Canada have increased from $ 2 to $ 14.54. In Latin America it is half of that.

Slowing down the subscription is not just about difficult comparisons. Nielsen’s numbers published in June show that streaming services now take longer viewers ’time than TV broadcasting. Netflix has a content issue. It lacks a new blockbuster, original hits. Initial analysis of Parrot Analytics ’subjective measure of“ demand for interest, ”which includes Google searches and social media, reveals that rivals like Disney have sparked interest in Netflix.

Netflix spent $ 8 billion on content in the first half of the year. They could have new hits in the second half. It also has a plan similar to Disney’s to monetize intellectual property through ecommerce and video games. But the competition is fierce. Amazon, Apple, Google and Facebook have also poured money into games.

Why not buy a studio instead? Disney bought 20th Century Fox and Amazon bought MGM. The independent film studio Lionsgate, which has a net worth of $ 3.4 billion, has franchises such as Twilight with the small Starz streaming service. Netflix should consider buying more content through a Hollywood studio before they are all shot.

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