Netflix claims ‘Fortnite’ is a bigger competitor than HBO


  • TECH
  • Monday, 21 Jan 2019

A selection of Netflix Inc. original content sits displayed in the Netflix app on an Apple Inc. iPad tablet device in this arranged photograph in London, U.K., on Monday, Aug. 20, 2018. The NYSE FANG+ Index is an equal-dollar weighted index designed to represent a segment of the technology and consumer discretionary sectors consisting of highly-traded growth stocks of technology and tech-enabled companies. Photographer: Jason Alden/Bloomberg

LOS ANGELES: It may be mostly gamesmanship, but Netflix says it’s not really focused on rival streaming-video services from Amazon, Hulu, Disney, WarnerMedia or other big players as much as improving its own service to win share of consumers’ attention. 

“We compete with (and lose to) Fortnite more than HBO,” Netflix told investors in its quarterly letter for Q4. “There are thousands of competitors in this highly fragmented market vying to entertain consumers and low barriers to entry for those great experiences.” 

Epic Games’ Fortnite certainly has been a knockout hit. The online-game title generated US$2.4bil (RM9.88bil) in revenue for 2018, per estimates from industry analyst firm SuperData, with some 200 million players. 

YouTube remains a significant rival in Netflix’s eyes. When YouTube suffered a global outage for about 90 minutes in October 2018, according to Netflix, it saw a spike in viewing as well as customer signups. Relative to YouTube, Hulu represents a small slice of viewing time, Netflix said. Hulu, which says it topped 25 million customers as of the end of 2018 and gained 8 million for the year, is “successful in the US”, Netflix allowed, but Hulu for now only offers service in the United States compared with Netflix’s global footprint. 

“Our focus is not on Disney+, Amazon or others, but on how we can improve our experience for our members,” Netflix said in the letter. 

In reality, though, Netflix does compete directly with other services like Amazon Prime Video, Hulu, HBO Now, Showtime, CBS All Access and others for share of wallet. According to research by media consulting firm Magid, US consumers are willing to spend a total of around US$38 (RM156) per month for all their streaming services, which means people make choices among a finite competitive set. And Netflix will face new and well-funded rivals in subscription VOD services from Disney and WarnerMedia slated to debut later in 2019. In particular, Disney+ will become the streaming home for Walt Disney Studios, Lucasfilm, and Pixar titles – supplanting Netflix’s current output deal for the US and Canada. 

Recall that Netflix has made unorthodox – even hyperbolic – claims about its competitive set in the past. “We’re competing with sleep on the margin,” CEO Reed Hastings said on a 2017 earnings call, explaining that “when you watch a show from Netflix and you get addicted to it, you stay up late at night”. That comment drew a rebuke from the American Academy of Sleep Medicine, which stressed that getting a good night’s rest was more important than binge-watching. 

For the fourth quarter of 2018, Netflix reported 1.53 million paid net adds in the US and 7.31 million internationally, to end the year with 139 million streaming members worldwide – a substantial beat outside the US. The company’s stock was down in after-hours trading Jan 17, with Netflix missing its revenue target and issuing Q1 guidance that was lighter than expected in the US (perhaps related to its recently announced price increase). – Variety/Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
   

Did you find this article insightful?

Yes
No

Across The Star Online